The budget for 2004-05, which Finance and Planning Minister M Saifur 1 alunan is going to place to parliament tomorrow, is widely being touted as more of a "ballot-box budget" - one that will cautiously avoid harsh reforms like state-owned enterprises shutdowns even in the face of lender pressures.

With a general election due in just over two years from the start of the new fiscal from July 1, Saifur is also unlikely to risk raising taxes in the coming budget. But he is likely to introduce more stringent measures in income tax and VAT collection.
In his aggressive mission to mobilise more local resources to finance development ventures, and also to balance the account books to some extent, Saifur will continue to opt for expanding the tax net -trying to bring in more people than ever before under the tax regime.
Increased taxes would only be introduced indirectly and would ultimately be

passed on to the consumers in general, without affecting the businesspeople. Broad hints given by official sources suggest that the finance minister, presenting his loth budget since 1980 spread out between three BNP regimes, will have some surprise announcements.

The appointment of a tax ombudsman will be one of the steps Saifur may propose in the budget to check corruption in the tax administration, which, a study suggested, costs the exchequer Tk 1,500 crore a year.
Businesses and industries are expected to benefit from revisions of duty structures, especially regarding import of raw materials. Customs slabs may also be realigned in line with recommendations from trade bodies.
In a generous offer to public servants, Saifur may announce a new national pay scale, or at least the formation of a pay commission. Or, some other sources hint, he may come up with a lump sum increase in dearness allowance for government employees.
Either step will add to revenue expenditure, which the government perhaps will not mind at this moment considering the sentiment of thousands of traditionally ill-paid employees in the public sector.
The government has earmarked Tk 7,502 crone or 26 per cent of its total revenue expenditure in the current budget to pay the salaries of public servants.
The tax-free ceiling of individual income may be raised to Tk 1 lakh, from the current Tk 90,000, in view of the inflationary trend that has raised the cost of living. The minimum amount of individual income tax payable may be raised to Tk 1,500 from Tk 1,200.
The budget for the coming fiscal year is likely to exempt overseas wage earners from paying income tax for the next 10 years.
To increase the tax-GDP ratio, which is as low as about 10 per cent now, some stringent budgetary measures are likely, including mandatory submission of tax-returns by all tin holders and making taxpayers' identification number obligatory for various purposes.
TIN is now mandatory in 13 specific areas, including land purchase and renewal of licences. Latest statistics of the National Board of Revenue put the number of TIN holders in Bangladesh at 1,541,269 as of March 2004 -1,471,942 of them individuals and 40,164 companies.

The track hidden incomes, government officials will be asked to submit their tax returns through their respective departments.
It is widely believed that many government officials have accumulated large amounts of wealth, in both cash and kind, but have managed to keep, their income from the tax purview. The government in the 2001-2002 fiscal made obtaining TIN mandatory for government officials. However, less than one per cent of government officials submit their tax returns.
The new budget may introduce a universal self-assessment system in a bid to curtail the discretionary power of revenue officials, often blamed for corrupt practices and harassing taxpayers.

The new self-assessment system, modelled on recommendations by the trade associations and chambers, will allow the taxpayer - an individual or a private limited company - to submit income tax return to the tax department, to be accepted as final without any question, even if he or she or the company shows less income than in the previous fiscal.
As an incentive to the export-earning sectors, the finance minister in his budget speech may offer some tax rebates on export incomes of textiles, readymade garment and jute sectors.

Tax rebate will come as an extra benefit with tax holiday and other incentives continuing.
Eyeing a 19 per cent growth in value added tax revenue in the next fiscal, the finance minister may propose expansion of VAT in the service sector. Fifteen per cent VAT is likely to be imposed on notary public, translation, theme or amusement parks, event management, cyber cafes, legal services, dental care and immigration advising.
The government is expecting to generate an additional Tk 50 crore in VAT from these sectors, now out of the purview of VAT The VAT revenue target for the next fiscal may stand at Tk 10,643 crore.

VAT at the retail level will see an expansion, although the rate fixed on retail shops outside the big cities may be reduced.
The coming budget is likely to fix Tk 4,200 as yearly VAT for an individual retailer doing business under the city corporations of Dhaka and Chittagong, and Tk 3,000 for retailers doing business in the other city corporation areas. Retailers in district towns will likely have to pay Tk 2,000 in VAT and those with establishments outside district towns Tk 1,000.
Currently, retailers in all city corporation areas have to pay Tk 4,200 annually in VAT, retailers in district towns Tk 3,000 and those outside of either Tk 2,000.

Customs duty may be rationalised with the lowering of the highest tariff rate. Responding to calls from trade bodies, the finance minister may propose a reduction iri customs duty on many raw materials, risking further losses in customs revenues to be offset by growth expected in income tax and VAT areas.
During his pre-budget parleys, including one with the business community as a whole in early May, Saifur conveyed the broad message that strict measures will be taken to check tax evasion and to bring into the tax net more individual and commercial taxpayers.