Govt eyes market as land price deciding factor

Dhaka,  Wed,  23 August 2017
Published : 13 May 2017, 22:40:34 | Updated : 14 May 2017, 09:49:10
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Govt eyes market as land price deciding factor

Muhith hints at ‘comfortable’ VAT rate to allay concerns
Govt eyes market as land price deciding factor
FE Report

The government is planning not to fix land price (for registration purposes) to check accumulation of black money and rein in capital flight, Finance Minister AMA Muhith said Saturday.

Market would determine the land price, not government, he told members of the Economic Reporters' Forum (ERF) at a pre-budget meeting held at the finance ministry of the Bangladesh Secretariat in Dhaka.

Muhith said, "Mismatch in actual land price and government-fixed price is one of the major sources of black money. People cannot disclose the source of the money that leads to flight of capital," he said.

The government is considering making a comfortable rate by reducing the 15 per cent uniform rate of VAT in the new Value Added Tax (VAT) and Supplementary Duty Act 2012 following concern of businesses, he told the economic reporters.

The minister, however, said a one-percent cutback in the 15 per cent VAT stipulated in the new law would mean a revenue loss of Tk 40 billion (Tk 4,000 cr) for the public exchequer.

Govt eyes market as land price deciding factor

The new law is scheduled to come into force from July 01, 2017 by replacing the existing VAT law 1991.

The government aims to frame a uniform rate of VAT as the existing multiple rates are creating distortion in the VAT system. However, businesses demanded multiple rates of VAT as 15 per cent is too high in the country's context.

However, many of the industries and service sectors are currently under 15 per cent VAT and are major sources of tax receipt.

If the rate is reduced in the upcoming budget, VAT on those industries, like cigarettes, cement, telecoms, banking and some other sectors, will come under the new uniform or comfortable rate.

The finance minister, however, did not elaborate on this issue when the point was raised to him.

He said the new VAT law has been under process since 2009 and that VAT is one of the very potential sources of government income.

"We have a target to earn 40 per cent of our revenue from VAT," he added.

To another query about plugging holes of consumer VAT leakage, the minister said the government is installing electronic fiscal device to ensure proper deposit of VAT to the government exchequer.

He focused on human resource development, expansion of quality education, skilled teacher, and smooth remittance among priority areas of attention.

"Remittance flow is quite sluggish now. To boost up the flow, Prime Minister has instructed to waive the charge for the transfer of remittance money," he said.

Turning to share market, he said there was no law for the capital market, but it is now showing activities with significant reforms in the last three years.

"Now we can tell multinational companies and state-owned entities to offload their shares," he added.

He said the size of the budget for the next fiscal year would be around Tk 4.7 trillion--and it would be ninth consecutive and eleventh budget of Mr Muhith as finance minister.

ERF members put forward a set of proposals that include addressing capital flight, human resource development, checking tax evasion by foreign workers, bringing discipline in banking sector, and reducing corporate tax for listed companies in the budget for FY 2017-18.

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