Indian Prime Minister Narendra Modi won the election on a platform of less government and more governance, meaning he wanted a small government but more governance. Mr Modi did as he had promised; he formed a much smaller ministerial cabinet than the one under the previous Congress-led government. In Bangladesh, the issue of small government was alive up to 2000.
Now it seems everyone has forgotten the need for a small government, although some people still talk about governance. But to me, 'small government' and 'good governance' go together. Another feature that came to the fore in the recent days is, everyone is for more taxes, that is, the government should get more taxes and spend more.
I hardly see any economics in more taxes. After all, what tax is all about? It is the flow of private money to the coffers of the government. Now why should the private people pay so much money to the government? Is it because the government needs it? Needs of the government will remain unlimited, especially in a country like Bangladesh, whose public representatives themselves are keen to see more government money spent through them.
But does any public representative think seriously about the 'loss of economics' if the private money goes to the accounts of the government in the form of taxes? Yes, there would be a loss of economics for the nation as a whole if the tax money were left with private people and the money had a better use. In other words, until the government can prove that it spends taxpayers' money more efficiently, there is no extra economics in giving the money to the government through tax.
I do not know how many people think seriously about the economics of public spending vis-a-vis that of the private sector. If they had studied the issue seriously, they would not have been this enthusiastic to give more money to the government through taxes. By any measure, in a country like Bangladesh private spending is more efficient or brings more economics to the nation than the public spending.
Yes, I understand that the government needs taxes for its own going, for spending on education, big infrastructure projects, public utilities, and defence. But what is the logic behind government expenditure when the private sector is competitive? Is not the Bangladesh government spending a huge amount of money on
loss-making state enterprises
like Biman, jute mills or glass
factories?
Is not it a better economics for these loss-making government enterprises to be sold to the private sector?
The government says that it will sell them, but in practice it does not. How much money the government has spent on the loss-making public enterprises over the last 10 years? Definitely the amount will reach hundreds and thousands of crores of takas in the tax payers' money?
A question the taxpayers want to raise: how much profit has the government received from the business activities it conducted through the public enterprises against the investment it made in them in the last 10 years? Does the government still need four banks in its hands? These banks now ask for additional money for recapitalisation.
Where has their capital gone when private banks are making hefty profits? These institutions are only government-fund consumers. They are 'bottomless baskets'. You put something in them, which will be lost through their holes.
Does the government need to run the airlines Biman, when so many private airlines are there around? The government does not, and still it runs it. For running Biman-type enterprises why should the people be asked to pay taxes?
Unfortunately, our public representatives rarely raise these questions in parliament. They love to have more public fund allocations for themselves through the government, no matter from where the money is to come. I am not against a high tax-GDP ratio.
But what I want is to see the economic justification for more taxes. If the government expenditure goes into corruption financing, will the taxpayers still be asked to pay more taxes? Does the Bangladesh government need more than 14 lakh employees on its payroll?
Are the government employees absorbed full-time or do they find jobs to perform at full capacity? If the employees are not working at full capacity, they are definitely under-employed. That is, the taxpayers are paying to underwrite the payroll of the under-employed employees.
Another question, does a big budget lead to a big GDP? Not at all, and rather reverse; found to be correct sometimes. The government's revenue budget is going up at an accelerated rate, consuming three-fourth of the total budget. For what are we allowing the
revenue budget to go up in the speed we have seen in the recent years?
The writer is a Professor of Economics, University of Dhaka.
abuahmedecon@yahoo.com
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