Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Thursday, November 23, 2017 08:31:31 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

No relief anywhere for fixed income groups

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

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)

Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

Forces Mugabe relied on threw him out


ZIMBABWE'S President Robert Mugabe resigned on Tuesday ending his 37-year rule of the African nation as independence leader from British colonial rule in 1980. He started as a hero but ended as a most unpopular despot through his years of misrule, repression of dissent, election rigging and quarrelling with the ...

International »

Lebanon`s Hariri suspends resignation as PM, easing crisis


Reuters, Beirut :Lebanon's Saad al-Hariri on Wednesday suspended his decision to resign as prime minister at the request of President Michel Aoun to allow for dialogue, easing a major political crisis.Hariri made his announcement after returning to Beirut on Tuesday night for the first time since his Nov. 4 shock ...

Sports »

Ranjit Sarkar of Bangladesh in action during the boys' singles match of the Bengal Plastic Asian Under-14 Series Tennis Championship at the National Tennis Complex in the city's Ramna on Wednesday.


City »

Pedestrians walking through the very busy road adjacent to foot-over bridge at Banani's Kakoli area in the city risking the life but traffic police remain indifferent to stop the walking. This photo was taken yesterday.


Entertainment »

Kriti Sanon’s hair game sets major goals


A new hairstyle can instantly turn around your look and even your day and actress Kriti Sanon is surely setting some hair goals.  We are stunned by Kriti Sanon’s look, which combined the fun of braids with the elegance of blow-dried waves and some casuals at its best.  Here’s a ...

Entertainment »

Gulbadan from Firangi brings back the ‘Old School Mujra’ back


Kapil Sharma is gearing up for his next movie Firangi which is all set to release on 1st December 2017. A historical period drama set in 1920. The movie is produced by Kapil Sharma’s production while it is directed by Rajiev Dhingra. As the movie is ready to release in ...

Editorial »

HC verdict is well meaning: Hospitals must appreciate


THE High Court ordered hospitals and clinics not to hold body of a deceased if his or her family fails to immediately pay the medical bill to release the body. It has also asked the Health Secretary and the Director General of the Directorate of Health Services to issue a ...

International »

Putin, Assad for political solution to Syria`s conflict


Reuters, Moscow  :Russian President Vladimir Putin hosted Syrian leader Bashar al-Assad to talk about the need to move from military operations to the search for a political solution to Syria's conflict, the Kremlin said on Tuesday.Russia is actively trying to build an international consensus around a peace deal for Syria, ...

Sports »

A scene from the opening ceremony of the Omicon Group 43rd National A Chess Championship held at Bangladesh Chess Federation hall-room on Tuesday.


Sports »

Sharapova named in India luxury housing fraud probe


AFP, New Delhi :Five-time Grand Slam champion Maria Sharapova is under investigation in India for cheating and criminal conspiracy after the collapse of a luxury housing project that she endorsed, police and a lawyer said Tuesday.The firm behind the development is alleged to have taken millions of dollars from homebuyers ...

Entertainment »

Janhvi dazzles at IFFI in ethnic wear


Janhvi Kapoor who is all set mark her Bollywood debut with Karan Johar’s Dhadak opposite Ishaan Khatter makes a dazzling entry at 48th IFFI 2017 in Goa. Janhvi was accompanied by her mother Sridevi and father Boney Kapoor. Janhvi looked elegant wearing Anamika Khanna lehenga choli. It is probably Janhvi’s ...

City »

Uphold image of Armed Forces: President


President M Abdul Hamid on Tuesday asked the members of Armed Forces to uphold their image at national and international levels by ensuing utmost professionalism. "Uphold the image of the armed forces . . . Help continue the country's ongoing development trend in the days to come," President's Press Secretary ...

Editorial »

Use of toxic tannery wastes in poultry feed


MEDIA reports said an increasing number of poultry feed mills using dangerously toxic tannery wastes laced with poisonous chemicals as raw materials remain the biggest threat to public health. They are moreover flouting is a ban of the High Court for producing and marketing the toxic feed for animals which ...

International »

Putin plan to rejuvenate Russian politics makes slow progress


Reuters, Moscow :Poised to run for a fourth term, President Vladimir Putin has started clearing out the old Russian political elite and says he's bringing in young people with "fire in their eyes."But a Reuters analysis shows that he has made limited progress so far.In the run up to March ...

Sports »

Participants run during the Delhi Half Marathon in New Delhi, India on Sunday. Ethiopia's Birhanu Legese and Almaz Ayana won the men's and women's elite categories, respectively.


 
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