Budget drafted keeping ground realities in mind, not overly ambitious: Abdul Mazid

The proposed budget for the upcoming fiscal year 2024-25 (FY25) is a contractionary budget, and it has been drafted keeping the ground realities in mind, former secretary to the government and  Chairman of the National Board of Revenue Muhammad Abdul Mazid said today (6 June).

"Unlike other years, this budget cannot be called overly ambitious. If all other things remain the same, properly utilising the budget will not be an issue," he told The Business Standard in an immediate reaction to the proposed budget.

Abdul Mazid said, "The main goal of this budget is to bring inflation down; how that will be done remains to be seen."

He, however, said there are some discrepancies between the monetary policy and the budget.

"There are two types of tax: direct and indirect. Direct tax is a more important type of tax and should receive more focus. Direct tax even helps reduce discrepancy between different social classes," he noted.  "But we have not seen many initiatives to increase direct tax."

Referring to some proposed initiatives of the proposed budget, Mazid said higher call rates are all indirect taxes. VAT is an indirect tax. "It has a negative impact on inflation. VAT will impact things such as raw materials, in turn increasing the cost of business."

Regarding the tax waiver on legalising black money, he continued, "Taxpayers have to pay around 30-35% taxes, but black money can now be legalised by paying only 15% tax; even the fine that was there before has been waived. This will discourage not only the existing taxpayers but also the potential ones from becoming taxpayers in the first place."

The NBR has been tasked with collecting Tk480,000 crore in the next fiscal year, which is 11.6% higher than that of FY24, he stated.

"It would have been better if the non-tax revenue segment of government income were to earn more but it has in fact decreased. The non-tax revenue segment is planned to generate Tk45,000 crore, which is 10% lower than this year.

"A big chunk of this non-tax revenue is supposed to come from state-owned entities, which are not good at properly utilising funds."

He said around two years ago a law was drafted to use SOEs' Tk2,12,100 crore idle money sitting at banks to be used for development work. "They are not very efficient at handling idle funds. But nothing came to fruition. Around 17% of our GDP is lying with them."

Whether the NBR can reach the target set for it is not just a question of its efficiency, Mazid noted.

"Yes, the NBR has issues, they have manpower shortage, they are not digitised etc. But the economy must also be revitalised. The NBR cannot do that. It cannot also solve the issues plaguing the banking sector. Only good governance can do that," he said.