Let’s have a free fall

Budget in a modern state or a capitalist state or, if you like, a bourgeoisie state is made so complicated that commoners find it difficult to understand. There are taxes under different names and pseudo names imposed upon people. They pay tax but they don’t know how a big chunk of their income is given to the state that literally does nothing for them. There are jugglery of words, data, figures and statistics. Eye catchy words and empty slogan drown the sounds of people’s heart-wrenching cry.

This year the slogan of building a smart Bangladesh smarts our hearts when we see nothing for low and middle-income people in the budget. To have a sound knowledge of a budget speech no one has to be an economist or an academician. Let’s just have a look at what is there in store for those who are the lowest of the low and low and middle-income groups. There is a stimulus package for the rich. Yes, no package for. The rich don’t have to pay any surcharge on their net wealth worth up to Tk4 crore from the next fiscal year. It was Tk3 crore in the outgoing fiscal year while it was Tk2.5 crore surcharge exempt threshold in the budget of 2018-19.

As for the tax-exempt earning ceiling for the people with limited income it has been raised to Tk3.5 lakh from that of Tk3 lakh. A consolation reward indeed? Those who draw a salary of Tk30, 000 a month they have to pay tax. If inflation is taken into account, this tax-exempt earning ceiling has not increased at all. What is shocking and disheartening is a tax of Tk2, 000 for those whose yearly income is below Tk3.5 lakh a year which is not taxable at all. But those who file their income, expenditure and wealth statement even with this meager non-taxable yearly income they also have to pay a minimum tax of Tk2, 000. Otherwise they will not be able to avail 38 services.

As per the National Board of Revenue (NBR) rules, if you want to enjoy a credit card, borrow over Tk5 lakh from a financial institution and open a postal saving account of over Tk5 lakh and so on and so on you have to pay Tk2, 000 even if your income is not taxable. This minimum tax imposition came into sharp contradiction with the idea of tax-free income. In fact, there will be nothing like zero tax. Ordinary people are already burdened with indirect income taxes that constitute the major part of the income tax earned by the National Board of Revenue (NBR). Indirect tax is imposed upon goods and services. This tax is equally levied upon both the poor and the rich. If the direct tax (it is imposed on income) is not strictly levied then it will widen the gap between the rich and the poor.

Rather than depending more on indirect tax the government should have levied progressive tax (the more your income is the more you pay taxes) on the highest earners but they were given more comfort than the poor. It could help lessen inequity between the poor and the rich. The tax on the highest earners had already been reduced from 30 percent to 25 percent in 2021. When all are equal in terms of giving indirect taxes all are not equal in terms of paying taxes on their incomes.

The budget, by increasing indirect taxes like value added tax (VAT) and import duty, has put more burdens on the poor and middle-income groups. Let’s us have a look at the data on the current fiscal year. As of April the NBR could collect tax revenues from only 31.7 lakh taxpayers while the total number of registered taxpayers is 88 lakh. This data shows us who pays more and who pays less.

Prices of utilities increased manifolds last year. Here too both the rich and the poor pay equally. There is also no relief for the poor. But the budget has done a big deal for the comfort of the corporate houses. Corporate tax has been brought down by 2.5 percentage point.

Why is this inhumane discrepancy in imposing taxes? It is invisible hand of a band of oligarchs who play from behind the screen. We can’t visualize them because they are invisible. But their presence is very much everywhere. It is they who govern our lives, it is they who decide and determine our fates. Even the state is helpless because it is they who are the state, a deep state, a state within a state. Believe it or not your fate is at their mercy. It is they who are loan defaulters. Can one imagine that the amount of default loan can meet about half the budget deficit?

Our Finance Minister is not treading that path. When he was made the Finance Minister in 2019 AHM Mustafa Kamal in the month of September said the amount of default loan wouldn’t increase anymore. The amount of default loan was Tk112, 619 crore in June 2019. It soared to Tk134, 396 crore in September 2022 before it dropped to Tk131, 621 crore in March this year. This amount of default loan, if recovered, can meet about half the budget deficit of Tk261, 785 crore. Our Finance Minister will not do that. Instead he is going to heavily depend on bank borrowing.

The government also depended heavily on bank borrowing this fiscal year. The outcome is known to everybody. If the government borrows from the central bank and commercial banks it will lead to an injection of fresh money into the market. The government has to print fresh notes and coins increasing money circulation. People will have extra money that our economy can’t afford as it will be incompatible with our Gross Domestic Product (GDP). The market demands for goods will go up with buyers having extra money. It will also drive up the demand for imported goods. More imports mean more pressure on the foreign currency reserve. We are going to be caught in a vicious cycle.

What we saw in the last fiscal year is that the government couldn’t finally limit it to its set target of borrowing from banks. Of the budget deficit of Tk261, 785 crore the government has set the target of collecting Tk132, 395 crore from the banking system. It sounds an impossible target for the government to achieve. During the current fiscal year it has collected Tk85, 024 crore. If it fails to reach the target it will have to cut its spending. It also sounds impractical ahead of the national election. The government has to spend a huge amount of money from its fund for the election. All together the macroeconomic system might meet another setback further in the next year.

Even amid such a deepening crisis the future holds something in store for black money holders. If you are black money holders don’t worry as this crisis can’t give a damn to you. It is because you people account for about 35-40 per cent of our GDP. The government is not going to give unquestioned amnesty to you. You can questionably enjoy your black money.

This 30-40 per cent black money of the GDP and default loan of half the budget deficit can save the economy from coming crumbling down. If this questionable black money and default loan can be recovered the government doesn’t have to go to international money lenders and the domestic banks to meet the budget deficit. But it is not to happen. It is not supposed to happen. And it will not happen. Because it is they who are running the wheels of our economy! Let the wheels spin uncontrolled, uninterrupted and unrelenting. Let’s be trampled over. Let’s tumble down. Let’s crumble away. Let’s have a free fall, fall, fall. . .

The writer is a journalist. He can be contacted at [email protected]