Implementing the budget will be the real test
THE passage of the national budget for FY 2009-10 through the parliament and its eventual adoption with certain modifications have had an unmistakable ritualistic ring. For, the budget has been adopted in record quick-time amid the absence of the opposition with its numerous cut-motions having been guillotined.
Of course, there was simply no question of any of the budget proposals to be outvoted given the modest strength of the opposition in Jatiya Sangsad. Even so, by boycotting the parliament, BNP and its allies have unfortunately denied themselves the opportunity of taking issue with the government on its budgetary policy and speaking for their own constituents who sent them to parliament in the first place entrusted with the responsibility of looking after their weal and woe.
Coming to the amended aspects of the budget, we see the finance minister AMA Muhith going a mixed way in responding to demands from various circles for alteration of certain proposals of the original budget. In other words, the modifications contain some positive features but basically retain the original character of the budgetary thrusts. Overall though, the amendments have been, by and large, responsive to public, expert and business opinions.
On the controversial issue of whitening black money, the government has proved particularly amenable to criticism. It has limited the amnesty to one year and made it conditional upon a declaration of sources, submission of specific investment plans including purchase of one flat or real estate property in a lifetime and the two-year lock-in of the investment. The honest taxpayers may still feel discriminated against, because of the nominal tax rate applicable to the black money owners.
As for lock-in with the possibility of money getting stuck up for two years, the supply side of securities will have to be strengthened through an off-loading of government stakes as more private sector companies listed with the bourses.
The reduction in the corporate tax rate should go down well with the banks and leasing and finance companies, but not with the life insurance companies. The rate cut will help increase net profit of banks and financing houses which should enable them to pass on some of the benefit to the clients. Lending rates should come down. The insurance companies have a point when they say that tax on life insurance companies in neighbouring India is half of what is levied here.
The import levy on newsprint has been reduced from 5 to 3 percent providing very little relief to the newspaper industry whose running and production costs have vastly increased over time. The mobile industry has got some tax relief but the SIM tax remains unchanged. This, we think, is a very short-sighted measure.
Finally, tax reduction on computer and for local industry is a positive step.
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