Finance Division worried about budget deficit

Finance Division officials have expressed concerns over meeting the deficit in the current budget at the beginning of the fiscal year, citing the unimplemented VAT law.
Even Finance Minister AMA Muhith is not immune from worry, as he has also expressed doubts about meeting the ambitious budget targets without the implementation of the 2012 VAT Act. The minister has sought a work plan from the National Board of Revenue (NBR) to find ways to meet the deficit.
After a two-hour meeting on Thursday, Muhith directed NBR Chairman Najibur Rahman on the creation of a work plan, said Finance Division officials. The Finance Division will start a revision of the budget after the NBR has submitted the plan.
On July 30, members of the parliamentary standing committee on the Finance Division discussed the budget, suggesting that the deficit of Tk17,000 crore would be met by expansion of VAT areas along with collection of large dues by the NBR.
An estimated Tk5,000 crore will be earned from taxes and duties on cigarettes and biris, Tk500 crore from bank accounts and Biman tickets as excise duties, and Tk100 crore from fast food and 10% supplementary duties. Tk6,000 crore will be earned from other sectors as additional earning, according to Internal Resources Division sources.
The NBR is also set to earn Tk22,000 crore from Petro Bangla through dues, and an additional Tk2,000 crore from Petro Bangla during the current year.
According to Finance Division calculations, VAT collection will fall Tk67,000 crore short of the target due to postponement of the new law which introduces a 15% flat VAT rate on all sectors.
The decision to postpone the VAT law has raised eyebrows, questioning the government’s ability to meet its budget deficit, and the Finance Division says the deficit may force the government to borrow more from saving instruments and banking sectors.
The NBR has increased revenue targets by 34% to Tk91,275 crore in the current fiscal year through VAT and supplementary duty collections. The target for revenue from those sources for the fiscal year 2016-17 was Tk74,114 crore.
In the last fiscal year, the NBR managed to collect Tk52,842 crore up till April, which was 18.4% higher than the same period in the fiscal year 2015-16, which was Tk44,631 crore.