Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Thursday, July 27, 2017 02:43:37 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

No relief anywhere for fixed income groups

By
18th-Jul-2017       Readers ( 64 )   0 Comments
Comments
Share your thought
Post a comment »
Read all (0) »

Dr. Md. Shairul Mashreque :
Already public criticism in the form of tremendous reaction is reported to be scathing and bitter on the frantic attempt of the finance minister to promote financial inclusion penalizing the fixed income group. This may well be termed as best budget for the businessman or tycoons. If interest rate in bank, be it in saving account or fixed deposit, tends to decline the middle income group who want to save money to go by the hard days will withdraw all money from the bank. In the midst of this eventuality bank will definitely suffer liquidity crisis. So I advise the finance Minster not to think like Muhammed Bin Tughlog. Be rational and pro-people. The government may well be advised to rethink and delete that proposal for taxation or excise duties or vet that may cost heavily socially with the tax payers bearing the brunt of taxation. This may mean deliberate coercion to snatch money from the ordinary masses not thinking to punish those involved in money laundering scamp We are also critical of 15 percent vet. The size of the budget for 2017-18 fiscal year crosses the Tk 4 trillion mark, Finance Minister AMA Muhith has said..
According news reports : In his proposed budget for fiscal 2017-18, Finance Minister AMA Muhith prescribed a 60 percent hike of excise duty on account balance between Tk 1 lakh and Tk 10 lakh -- a move that will leave savers with even negative returns from their deposits. For or instance, if one keeps Tk 100,001 with a bank for an optimistic rate of 5 percent interest -- which, incidentally, is below the rate of inflation -- he/she should get Tk 1,250 at the end of three months in theory. But in reality, the return would be negative. Thanks to the 60 percent hike on excise duty, Tk 800 would be deducted from Tk 1,250, leaving him/her with Tk 450. Now from Tk 450, Tk 187 will be held back as income tax and another Tk 300 for account maintenance fee. So, the saver would have to foot an additional Tk 37 out of his/her pocket -- instead of an income from the savings. "We have not heard of such taxes or levies on deposits in any other country of the world," said Anis A Khan, chairman of the Association of Bankers, Bangladesh. The additional levy on bank deposits will erode the real savings of the country's citizens, he said, while urging the government to withdraw excise duty on debit or credit balances. "We feel this is a discouraging tool to increase the government's revenue and will dampen the people's savings habit," said Khan, also the managing director of Mutual Trust Bank.In practice, hardly any bank gives 5 percent interest on deposits; it is mostly 3-4 percent, with some offering as low as 2 percent. Mohammed Nurul Amin, managing director of Meghna Bank, said banks lowered deposit rate amid a lack of demand for credit.
"Now, the rise in excise duty will make people more reluctant to keep money with banks," he added. Besides, intentionally or unintentionally, not everyone has a TIN number, so they end up paying 15 percent income tax at source instead of 10 percent. The other option available to small savers is savings instrument, but that too is looking less rewarding given that an interest rate cut on the investment tool is in the works.So, where depositors will go? "The tax burden on depositors will only create a moral hazard, compelling people to keep money either under their pillows or launder money abroad," said Biru Paksha Paul, former chief economist of the Bangladesh Bank.The hike in excise duty will not only affect the depositors, it will make the sick banking industry sicker."The real return from deposits has already been negative because the interest rate came below the inflation rate.
Amid this situation the new excise duty is unrealistic," he added. The move will divert money to the capital market or the informal sectors, said Golam Hafiz Ahmed, immediate past managing director of NCC Bank, said "Cooperatives, NGOs, local merchants and non-banking financial institutions will get a chance to lure in savers by offering higher rates. But, there will also be a risk of being cheated," he said.  According to the proposed budget, accounts with balance of up to Tk 1 lakh will remain exempt from the excise duty. An excise duty of Tk 800 will be imposed on debit or credit balance exceeding Tk 1 lakh but less than Tk 10 lakh, up from Tk 500 at present.For balance between Tk 10 lakh and Tk 1 crore, the excise duty would be Tk 2,500, about 67 percent higher than the current rate. Some Tk 12,000 will be slapped on balance between Tk 1 crore and Tk 5 crore. It is now Tk 7,500.And for balance exceeding Tk 5 crore, Tk 25,000 will be slapped on as excise duty, up from Tk 15,000 now. As of December 2016, about 83 lakh accounts stand to be affected by the proposed increase in excise duty next fiscal year.Bank accounts are the largest contributor to excise duty. In the first eight months of the fiscal year, Tk 1,480 crore was collected as excise duty, up 16 percent from a year earlier, according to data from the National Board of Revenue. Meanwhile, the banking sector is badly in want of effective governance. And yet, instead of addressing the grave problem, the government is manoeuvring to extract more money for savers. In Muhith's budget speech there was not a single mention of the steps the government is taking to deal with the problem of state banks, which have a capital shortfall of more than Tk 13,977 crore as of March.Since fiscal 2011-12, the government has injected a total of Tk 9,655 crore to shore up the state banks' capital bas.
(Dr. Md. Shairul Mashreque, Chittagong University)

0 Comments. Share your thoughts also.
Write a comment
Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

It is painful to see how people of Dhaka and Chittagong suffering


INTERMITTENT heavy rainfall in the two big cities of the country has brought them closer to the breaking point. On one hand the rains worsened by gusty wind is creating unimaginable water logging and traffic jams, while on the other unplanned and undisciplined ongoing city development programmes have created innumerable ...

Cricket »

Dhawan, Pujara score centuries as India end Day 1 at 399/3


Agency :India made a dream start to the first Test by scoring 399 for 3 on the first day of the match with Shikhar Dhawan and Cheteshwar Pujara scoring contrasting centuries and sharing a 253-run stand for the second wicket. Dhawan was dismissed for 190.Sri Lanka had their tail up ...

Entertainment »

Runa, Bhabna wish success for each other


Sheikh Arif Bulbon :Runa Khan and Ashna Habib Bhabna are those two actresses of present time in small screen who have already won the hearts of many viewers by virtue of their acting skills and qualities. Both TV plays/ serials and TV commercials presence of Runa Khan is significant. On ...

City »

Major areas of the city went under water due to torrential rain causing sufferings to the dwellers yesterday. This picture was taken from city`s Dayaganj area yesterday.


.

International »

Rouhani says Iran will `respond` if US missile law passes


AP, Tehran : Iran's President Hassan Rouhani said Wednesday his country will respond if a bill in the U.S. Congress imposing sanctions on people involved in Iran's ballistic missile program becomes law.The House of Representatives passed the bill on Tuesday and it now goes to the Senate.Without giving details, Rouhani said ...

Editorial »

HSC results: Fall in pass rates fall in standard too


THE results of this year's HSC examinations saw a significant fall in both the success rate and the number of highest achievers due to the introduction of a new evaluation method, students' poor performance in English and shocking performance of students of Comilla Board. The overall pass rate of Higher ...

Cricket »

Mahmudullah Riyad passes ten years in international cricket


Sports Reporter :Mahmudullah Riyad have passed ten years in international cricket. Riyad made his debut in an ODI against Sri Lanka on 25th July in 2007 at Colombo, the capital city of Sri Lanka. He made his debut memorable scoring 36 runs and bagging two wickets for 28 runs. Riyad ...

Sports »

Britain`s Adam Peaty swims when setting a new world record in a men`s 50-meter breaststroke heat during the swimming competitions of the World Aquatics Championships in Budapest, Hungary on Tuesday.


Entertainment »

Tareen`s two Eid telefilms


Sheikh Arif Bulbon :While staying inside or outside the country her parents always remains worried at their residence in the city’s Dhanmondi area. For this reason, after finishing her works Tareen prefers to comeback to parents. Because she feels she is still child to them. Despite having engagement with activities ...

Entertainment »

Shah Rukh collaborates with Grammy winner Diplo for Jab Harry met Sejal


Shah Rukh Khan collaborates with yet another International music sensation after Akon. Shah Rukh and Grammy Winer Diplo come together for a song titled Phurrr from Jab Harry met Sejal. The Superstar has earlier got Akon on board for his film Ra.One, wherein Akon lent his voice for Chammak Challo ...

International »

Saudi, allies unveil Qatar `terrorist` blacklist


AFP, Riyadh :Saudi Arabia and its allies unveiled a "terrorist" blacklist on Tuesday of 18 organisations and individuals suspected of links with Islamist extremism that they said had ties with regional rival Qatar.The move by the four Arab governments came despite mounting international pressure to compromise in their weeks-old boycott ...

City »

Prime Minister Sheikh Hasina addressing the DC Conference at her office on Tuesday.


Editorial »

They are only self-seekers and have no love for Bangabandhu


WHEN there are so many critically important national issues to be addressed - some of our politicians needlessly makes a mountain out of a mole hill by creating pointless controversy. This time the hullabaloo surrounds the portrait drawing of Bangabandhu Sheikh Mujib by a ten-year old boy. Understandably, there was ...

Football »

Neymar staying at Barcelona, says teammate Pique


Brazilian superstar striker Neymar will stay with Barcelona, according to teammate Gerard Pique, who posted a Twitter message on the striker's status Sunday.Spanish international defender Pique indicated the South American maestro would continue at Camp Nou by tweeting a photo of Neymar with the caption "He's staying."The message came hours ...

International »

China says it wants to `maintain stability` in disputed South China Sea


Reuters, Bangkok :Chinese Foreign Minister Wang Yi said on Monday Beijing wanted to maintain stability in the South China Sea as it seeks alliances in the region amid tensions in the disputed waters.The United States has criticized China for disregarding international law by the construction and militarization of artificial islands ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news