The finance and planning minister, M Saifur Rahman, looks set to propose on June 9 an ambitious budget, in terms of both revenue target and development expenditure, with imposition of fresh taxes—direct and indirect—on people of all strata, sources in the finance ministry told New Age on Monday.

The total outlay — development and non-development expenditures combined—for the 2005-06 fiscal year is likely to be between Tk 64,000 crore and Tk 64,500 crore, about 17 per cent higher than the revised outlay for the current financial year.

The original outlay of Tk 57,284 crore for the 2004-05 fiscal year is expected to be revised downward to Tk 54,784 crore, the sources said.

The government is going to fix the revenue receipt for the next fiscal year at Tk 44,196 crore, up 16 per cent from the revenue receipt for the current financial year, which is likely to be revised to Tk 38,100 crore from Tk 41,300 crore, of which tax revenue (collected by the National Board of Revenue) was Tk 32,190 crore.

It has already finalised a Tk 24,500-crore annual development programme for the next fiscal year, up 20 per cent from the revised ADP for the current financial year.

The planned budget looks ambitious, given the revenue earning and the ADP implementation in the first 11 months of the current fiscal year and the fact that the government has undertaken no initiative for institutional capacity building to meet the budget target.

In the first 11 months of the current fiscal year the revenue board earned Tk 25,937 crore, Tk 6,253 crore short of the original and Tk 4,063 crore of the revised targets.

NBR sources said the total revenue collection is likely to be Tk 4,000 crore less than the original and over Tk 1,500 crore less than the revised targets.

An NBR high official told New Age claimed that yet another ambitious revenue target—likely to be 19 per cent higher than the revised target for the current fiscal year—had been fixed at the dictate of the International Monetary Fund and the wish of the finance minister.

The tax revenue target is learnt to have been fixed at Tk 35,500 crore, 18.66 per cent or Tk 5,500 crore higher than target of the current fiscal year after a possible downward revision, said the ministry sources.

The NBR official termed the planned revenue target ambitious and warned of yet another shortfall in 2005-06. ‘Institutional capacity building along with injecting fresh drives to generate more revenue is mandatory to translate the target into reality.’

Sources outside the revenue board believe that the government must contain corruption in the tax department besides institutional overhaul if it wants to meet the revenue target.

As far as implementation of development expenditure is concerned, the government was forced to slash the ADP allocation for 2005-05 by Tk 1,500 crore amid a grim implementation scenario in the first 11 months.

According to the planning ministry, Tk 13,486 crore, or 61.30 per cent of the ADP, have been utilised as of May 25.

Sources in the ministry told New Age on Monday that at best Tk 18,000 crore of the revised ADP could be utilised. A member of the Planning Commission made no bones about his dissatisfaction with the size of the ADP for the next fiscal year. ‘Only permission for plundering of public fund and no project implementation policy can ensure cent per cent implementation of the next fiscal year’s jumbo-sized ADP.’

The budget is also set to impose a number of revenue measures that will put additional burden on people from all walks of life. It is likely to bring down the number of imported items that enjoy zero-tariff down to 300-350 from 519 now.

Withdrawal of zero-tariff for about 300 items, mainly raw materials for industrial production, will translate into a price spiral for consumer items, fear businesspeople.

‘Imported finished products are set to capture local market and thus put the local industries I peril,’ an industrialist told New Age. ‘Ultimately consumers would be affected, for which local entrepreneurs could no way be blamed.’

Besides, the budget is likely to impose a 10 per cent tax at source on interest of fixed deposits with non-banking financial institutions, which will affect small savers.

Construction materials including brick would be costlier because of the withdrawal of tax holiday from construction material manufacturing sector and the increase of at-source tax on brick field, sources said. The minimum tax for individual is likely to shot up from Tk 1,800 from Tk 1,500.