Heavy tax burden to deepen economic sluggishness

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The economy is experiencing a sluggish trend and an investment climate has to be created to overcome it, economist Atiur Rahman said Sunday, reports bdnews24.com.
If the government announces without delay the date and schedule of the election, investors will be encouraged at the indication of change, Rahman told reporters in a post-budget briefing at the office of Unnayan Samunnay, a non-governmental organisation.
A written review of the budget proposed for fiscal 2007-08 stated this year's budget has been presented in an uncertain climate, in the absence of parliament. It claimed that the lull in the economy would deepen under a heavy tax burden and import duty.
The review mentioned that a Tk 871.37 billion (87,137 crore) layout for the proposed budget, which means a 30.37 per cent rise from the previous revised budget, was oversized.
It said the hefty budget would have huge pressure on the economy and expressed doubt about achievement of the growth target, which is 7.0 per cent.
The review praised the expansion of tax-free status for individuals, tax waivers for private universities and organisations for research, the 45 per cent tax proposal for mobile phone companies with a 10 per cent waiver in incentive to go public and the reduction of duty on newsprint imports.
It termed the internal tax collections target ambitious and said investment would be discouraged due to market contraction with a negative impact on revenue earnings.
As for inflation, the review said the withdrawal of duty on lentil and edible oil, and doubling the import of rice and wheat, would not be enough to bring down the prices of daily essentials.
The increase in the prices of diesel will add Tk 10.0 billion (1,000 crore) to the production cost in agricultural products in the next fiscal year whereas the subsidy on the sector is only 7.50 billion (Tk 750 crore), it said.
The review also stated that the price increase in mobile phones and computers would have a negative impact on the economy.
UNB adds: The pace of price spiral has out shined the government's generous proposal to increase allowances for the poor in the budget 2007-08 as per an analysis by a non-government research body.
The research organisation, Shamunnay, found that under the budgetary allocation eligible poor would now get Tk 7.23 per day against his or her minimum requirement of about Tk 30 for half-kilo coarse rice, pulse and some vegetable for a square meal.