CPD outlines action plan to defeat budget challenges

The Centre for Policy Dialogue (CPD) has come up with a number of recommendations for the government to tackle the six major challenges identified in the proposed national budget for the 2022-23 financial year.

The think-tank has suggested allowing tax concession to essential commodities at both import and domestic stages, providing tax reliefs to middle-income groups and expanding coverage under the social safety net programmes and per capita allocation, among other recommendations.

CPD Research Director Dr Khondaker Golam Moazzem made the calls while presenting the keynote paper at the National Budget Dialogue 2022 on Thursday.

He also recommended allocating adequate resources for subsidies to keep the administered prices of petroleum products, electricity, gas, and fertilizer.

The budget for FY2022-23 needed to be innovative in approach, flexible in allocation priorities and set specific targets in line with budgetary measures to address the challenges, he said.

“The budget speech diagnosed the symptoms but failed to prescribe the required medication,” Moazzem added.

CPD officials also said the existing high duties on daily necessary items should be lowered immediately to contain the rising inflation.

The fiscal and monetary measures that have been proposed to guard the poor, the lower-income and limited-income groups, and the middle class were inadequate, said CPD Executive Director Dr Fahmida Khatun.

Launderers’ amnesty has to go

Against payment of a certain tax rate as a penalty, the government in the proposed budget has also offered amnesty for money launderers to get the siphoned-off money back home.

Speakers at the dialogue strongly urged the government to backtrack from this plan and said this ethically unacceptable initiative will discourage honest taxpayers and fail to generate the intended revenue.

“If honest taxpayers become dishonest, how will we combat that crisis?” Dhaka Chamber of Commerce and Industry (DCCI) President Rizwan Rahman asked policymakers, expressing his concern.

He said that general people and businesses pay 18-25 per cent tax under different criteria right now and the 7

per cent tax rate for money launderers in the next fiscal year will only encourage everyone to launder money abroad.

“I don’t see any logic behind the decision to give amnesty to money launderers. If the government encourages money laundering, this will increase social conflict,” said MP Anisul Islam Mahmud, chairman of the Parliamentary Standing Committee on Expatriates’ Welfare and Overseas Employment Ministry.

“I’m struggling to understand whose interest this government move will serve. This proposal has no ethical and economic ground and it has to go,” he added.

Tax and other issues

CPD also recommended that NBR should set up EFD/SDC devices in instalments and focus more on having the draft Income Tax Bill quickly passed to modernize the tax collection system.

DCCI President Rizwan said, “The government has proposed a 2.5 per cent cut on the corporate tax rate for listed and non-listed companies.

“However, one of the two conditions, which says the companies will have to transact up to Tk 12 lakh through banks, will create inequality among the small and big enterprises. This provision should be removed.”

Addressing the dialogue, Bangladesh Employers’ Federation Vice-President Shusmita Anis demanded some relief for middle and low-income groups, who have been most affected by Covid-19 and inflation, through a reduction of VAT at the retail level.

Socialist Workers Front President Razekuzzaman Ratan said the budget’s VAT and tax related proposals did not reflect the demands of the country’s 6.82 lakh labours and workers.

Former commerce minister Amir Khosru Mahmud Chowdhury said, “The ability, accountability and transparency of the statistics based on which the budget has been created are questionable.

“Because the actual inflation is over 12 per cent and the situation of the lower-income group is worsening day by day.”

“I am surprised that our foreign exchange reserve is declining even though the expatriates are sending more remittance through formal channels,” added Anisul.

Addressing the event, Planning Minister MA Mannan said, “The government is focusing more on financial inclusion via employment-generating, housing, etc.

“Because the monthly minimum allowance for the marginalised people under the social safety net is not the sustainable strategy to reduce poverty.”

MP Kazi Nabil Ahmad, a member of the Parliamentary Standing Committee on Finance Ministry, said he will discuss CPD’s recommendations with the people concerned and hopefully come up with a budget that will be beneficial for the people.