Towards fixing the budget challenges

The proposed budget for FY23 has come at a time when the world is grappling with the fall out of the pandemic plus the global economic slowdown triggered by the war in Ukraine. The World Bank in a report recently made a grim prognosis saying that a protracted war will trigger feeble growth, magnifying already existing economic woes.

Bangladesh’s economy has directly felt the impact of the war. The volatility of prices of essentials has been linked to the conflict in Europe with local economists fearing that in the days to come there may be a recession plus a rise in prices of edible oil and other commodities.

With the conflict showing no signs of ending anytime soon, the budget has to be realistic, pro people with strong emphasis on tax concessions. As per a TBP report, Centre for Policy Dialogue, CPD, has come up with a series of recommendations to tackle the challenges identified in the proposed budget for the fiscal 2022-23.

The first and foremost is the tax relief on certain essential items which will make lives easier for the middle and lower middle class people. In the last few months, inflation has seen soaring prices of rice, edible oil with protein becoming a luxury for people with limited incomes.

Keeping the welfare of the masses in mind, immediate attention must be given to price control. Such measures are also needed to contain the price hike of petroleum based products, electricity, gas and fertiliser.

The decision to grant amnesty to money launderers allowing 7 per cent tax to bring back siphoned off money appears to be an open invitation to launder money so it can be brought back later at a lower rate of tax. This decision on one hand ridicules the general tax payer who gives between 18-25 per cent as tax, making a mockery of society’s ethical values.

Once this is permitted, the whole ethical structure of society will crumble. Surprisingly, several people in government has defended this dubious and morally vacuous scheme without taking into cognizance the possible ramifications.

By permitting such a system, the government will only give a message of acknowledgement to an immoral practice, which it had slammed earlier. It doesn’t take a social scientist to foresee the repercussions of such double standards.

An honest taxpayer may become disillusioned while for the upcoming generation this will send the message that there is a way out even if laws have been broken.

The decision to cut corporate tax by 2.5 per cent is praiseworthy although the condition those companies have to transact up to Tk. 12 lakh through banks will lead to inequality and resentment.

Everything said and done, the war in Europe along with its lasting impact cannot be kept out of the picture because this is a confrontation involving major global powers. In addition to creating a schism in geo-politics, an economic slump seems inevitable.

Several international organisations have warned of an impending recession along with stagflation. For Bangladesh, the key purpose should be to avoid or minimise the impact of a slowdown.

Keeping the low income segment happy, controlling prices of major items and easing the tax burden on the masses with some strong steps to curb laundering are needed to ride out the ongoing storm.

The call by the prime minister for a nationwide austerity drive was followed by a proposal to keep shops closed after 8pm, minimise all kinds of illumination and curb the use of private cars – moves aimed to bring down the use of energy.

Faced with two back to back calamities–Covid-19 and the war, any future growth assessment has to be realistic and free from the usual gloss.