Muhith wants debate on when to start a fiscal year

Finance Minister AMA Muhith has agreed to have an open debate on the start and end month of the country's fiscal year.

A fiscal year is the period used by governments for accounting and budget purposes, which vary between countries. It is also used for financial reporting by business and other organisations.

“Whenever the topic of changing the fiscal year came, I defended it every time. But not this time,” Muhith told a pre-budget discussion organised by the Metropolitan Chamber of Commerce and Industry (MCCI) at its office on Saturday.

Mohammed Farashuddin, former governor of Bangladesh Bank, raised the topic of the fiscal year that is currently from July to June.

Analysts often talk about the timeframe of the fiscal year as the last quarter of the year is mainly a rainy season and costly resources are wasted in the name of development works at that time.

“I had a fixed idea that July-June is good, but it seems I should relax my very fixed idea,” said Muhith. Muhith also gave a brief history on how Bangladesh introduced July-June as its fiscal year. Under the British regime, this part of the world followed April-March as its fiscal year.

But in 1958, under a caretaker government, the then government introduced a new fiscal year beginning from July, coming under pressure from the United States.

At the time, the US had followed a July-June fiscal year. But they have changed it since. “This time, I urge for an open discussion. Let's begin this year. It is something to think about. I will also give my opinion,” said the finance minister.

On the poor inflow of foreign direct investment, he blamed the domestic investors' shyness regarding investment. “I can't understand why domestic investors are shy after 2014. I am sorry to say, the response was poor in 2015 and 2016, although those were peaceful years,” said Muhith. “We will have to have more domestic investment.”

In response to businessmen's query on the new VAT law, the minister said it is going to be imposed on July 1. “It is final.”

Noted Economist Wahiduddin Mahmud said Bangladesh's tax revenue income does not match its efforts to becoming a middle income country.

“Paying tax is an exception here, but it should be the reverse.” The National Board of Revenue has done well in income tax, but not with VAT, he said.

The economist said there are many talks on the advantages and disadvantages of the business community on the new VAT law, but no discussion on the consumers, who will pay the VAT.

MCCI President Nihad Kabir moderated the event attended by business leaders, analysts and economists.