Hike in excise duty on bank deposits may be scrapped

Finance Minister AMA Muhith yesterday hinted that the government may withdraw the proposed increase in excise duty on account balance of more than Tk 1 lakh from 2017-18.

"When you started shouting, it seemed as if the excise duty was something new -- it has been around for an eternal period. So now the question of increasing rate, if there will be any changes it will be from this end. That's it," Muhith told reporters after a meeting of the cabinet committee on purchase.

The finance minister's comment comes a day after MA Mannan, state minister for finance and planning, hinted in parliament that the finance ministry may reconsider its proposal to raise the excise duty.

When asked about Mannan's comment, Muhith said: "He is not an irresponsible person. If he has said it, that might be the case."

Muhith also said that his proposal on June 1 to hike the excise duty on account balance of upwards of Tk 1 lakh was just a proposal.

"Nothing has been finalised. It will be discussed in the assembly and then implemented," he added.

While placing the budget for fiscal 2017-18 Muhith proposed raising the excise duty from Tk 500 to Tk 800 on accounts where the balance -- whether debit or credit -- exceeds Tk 1 lakh but stays less than Tk 10 lakh at any point of time during a year.

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 as excise duty, up from Tk 15,000 now. Since then, the matter has been discussed non-stop in the media, talk shows and social media.

In parliament too, it is being discussed every day and both treasury and opposition bench members have criticised the proposal. Muhith's latest comments are quite the U-turn for him.

"It is very difficult to give a definition of rich men. But I know the people who keep Tk 1 lakh or more into their bank accounts are capable of bearing the expenditure of the excise duty," he said at a post-budget press conference on June 2.