The proposed national budget for the upcoming fiscal year (2018-19 or FY19) is a continuation of the previous ones both in structure and spirit. Its size has been bloated to Tk 4.64 trillion - 25 per cent higher than the Tk 3.71 billion revised budget of the current FY18 fiscal. (The original budget for FY18 was Tk 4.0 trillion.) The jump in the budget size means a higher outlay and more taxes.
In the proposed budget, the finance minister is apparently not aggressive in matters of collecting taxes. But a careful review of the tax-related steps would give a different picture. For example, the tax-free threshold for the individual income tax payers has remained unchanged. This implies that the finance minister has chosen to remain indifferent to the erosion of real income due to inflation and other factors.
The official inflation rate is stated to have come down to below 6.0 per cent on an average. But there is much more to this. Pervasive corruption and irregularities are taking a heavy toll on the general people. The people have to pay additional prices in different shapes due to widespread corruption and irregularities in the state machineries. These costs are not counted while measuring inflation. The finance minister himself acknowledged the prevalence of corruption in his budget speech.
Thus, the finance minister has actually increased tax burden on the income tax-paying population. Besides, he also wants to bring new wage-earners under the direct tax net.
The target for National Board of Revenue (NBR) was originally fixed at Tk 2.48 trillion in the current fiscal year's budget. Later, it was revised down to Tk 2.25 trillion. Thus the target for the next fiscal year has been raised by 31.55 per cent.
Being fully aware of the tough challenges of reaching closer to the target, the tax authorities have spread the net of Value Added Tax (VAT) to new areas like ride-sharing services. It is a pitiable move when the government has failed to ensure a least comfortable public transport system in the capital city as well as outside. At the same time, in the name of supporting the local industries, the budgetary incentives to produce or assemble motorcycles locally will add more trouble to the already chaotic traffic on the roads.
In fact, the government has been incentivising motorcycles for the last couple of years without streamlining the movement of this unruly vehicle. The cheaper motorcycles have already started to create a social disorder. A growing number of teenagers are now driving the vehicle carelessly and recklessly. The motorbike gives the youths a restless feeling of independence.
Mr Muhith also provides for a series of social safety measures for mainly the low-income people. The allocation for social welfare has been raised by around 6.50 per cent in the next budget to Tk 275.25 billion. There is, however, valid reason to apprehend that a part of these tiny benefits will not fully reach the real beneficiaries. Lack of good governance is negatively impacting almost every sphere of governance and the daily lives of the people. The finance minister is, however, optimistic that the Government to Person (G2P) payment system of allowances under safety net programmes will be made transparent and graft-free by using information technology platforms. But our experiences show that ineptness in the digitisation process takes away the real benefits in many cases.
Growing socio-economic disparity within the country is now a harsh reality. The finance minister and his cabinet colleagues, however, differed with the view in the post-budget press conference. But a few steps in the proposed budget indicate that the government is not unaware of the reality. The imposition of wealth surcharge on people having two four-wheel motor cars or a house property having an aggregate area of 8000 square feet or above in City Corporation area is one such step. This is undoubtedly a welcome move.
The reduction of corporate tax rate by 2.50 percentage points for the listed banks and financial institutions has already drawn huge criticisms. It is not very clear why only banks and financial institutions would get the tax cut when other corporate entities are also there. Moreover, the government has been allowing the directors and owners of different banks to flout rules and regulations over the years. It has already weakened corporate governance in the banking sector. The representative body of the bank owners has also been used to collect big chunks of money from different banks to make contributions to various government funds.
The proposed fiscal measures and incentives in the budget indicate that the upcoming election is under consideration of the finance minister. It was last year when the Finance Minister made it clear that his next budget would be an election budget. In the post-budget press conference, he, however, argued that every budget was an election budget in the sense that he has to think about the welfare of the country's people. It is also true in the sense that a democratically elected government has to fulfil its election pledges. Again, the spending spree in the year of election may significantly compromise the quality of works.
As a matter of fact, compromising the quality and sustainability of development works has become a trend in Bangladesh. Outcome of different infrastructure projects reflect this trend, which also exert a negative impact on the society.