Speakers at a pre-budget discussion Wednesday stressed the need for increasing the tax net, ensuring proper allocation of budget in priority projects and establishing authority of parliament in budget formulation.
They criticised budget allocations for the Annual Development Programme (ADP) in many unnecessary and politically motivated projects and later cutting the same depriving various priority projects meant for the wellbeing of people.
They also said that the budget preparation process in Bangladesh is not transparent and that good governance is absent in the budget implementation process.
They made the observations at the pre-budget discussion held at the Prothom Alo conference room in the city. Institute of Chartered Accountants of Bangladesh (ICAB) and Bengali daily Prothom Alo organised the discussion with ICAB president Showkat Hossain in the chair. Former ICAB president Humayun Kabir moderated the discussion.
In his speech, former adviser to the caretaker government Akbar Ali Khan said the budgeting process is not transparent in Bangladesh and there is room for reforms. There is no ideal parliament in the country elected by the people as 50 per cent of its representatives are elected unopposed.
He stressed the need for establishing authority of the parliament on the budget and making the parliamentary standing committee functional for budget preparation. He feared that the process of luxury expenditure without approval of the parliament may make the whole budgeting system meaningless.
Mr Khan said there are many unnecessary projects in the ADP which should be prevented. Indirect tax like value added tax (VAT) ultimately affects the common and poor people and VAT should be less than 15 per cent as the size of economy has increased. He criticised that the reform process of taxation which started in the 90s has been stalled in recent years.
Mr Khan said the government increases revenue target without giving any guideline from where this extra money will be collected. Criticising the government's step to dissolve the privatisation commission, he said the government institutions are incurring loss of billions of taka and it is counted in the economy. The government is issuing bonds shouldering the liabilities on the next generation for these loss-making institutions.
He said the economic growth of Bangladesh has been growing at about 6.0 per cent mainly due to the contribution of the lower section of people like migrant workers, readymade garment workers and microcredit borrowers.
Former NBR (National Board of Revenue) chairman Abdul Majid said the allocation of ADP in the upcoming budget which is Tk 790 billion and the revised ADP of the last fiscal which is Tk 600 billion is very large. The ADP allocation should be based on the revised ADP budget.
He suggested the government to target an aggressive revenue budget as various sectors, individuals and levels are not covered in the tax net. Considering the tax-GDP ratio in Bangladesh, it can be said that there is flow of money in the economy and there is exchange but the government is not getting the tax.
Mr Majid criticised the ADP implementation process of the government saying some 47 per cent ADP has been implemented over the last 10 months. But it can so happen that another 47 per cent will be implemented in just two months, raising the question of quality of budget implementation.
Former adviser to the caretaker government M Hafiz Uddin Khan said there are many projects in the ADP which are unnecessary and many priority projects are deprived of funds. He said there is duplication in various government programmes. Criticising various luxury expenditure by the government like deploying police for secretaries or high government officials, he said there was no comprehensive action from the government to control expenditure although there is a wing in the ministry of finance.
Criticising the present law and order situation, he said although the government has deployed law enforcers in different corners affecting budget, there is hardly any improvement. He also criticised the centalised system of budget preparation, ignoring division-level requirements in the budgeting process.
Former NBR member Faruk Ahmed Khan said the tax-GDP ratio is very poor in Bangladesh, compared to those of the neighbouring countries. Although the government has set a reasonable revenue collection target of Tk 1,490 billion in the upcoming budget, there is doubt of being successful in achieving it as was evident in the past years.
NBR fails to achieve the target mainly due to lack of reforms in the tax department, shortage of skilled personnel and corruption. He stressed the need for making investment of skill development of the tax personnel to become successful in revenue collection.
He also criticised various opportunities for revamping the stock market in the budget saying no further facility can restore the market.
Mr Ahmed said the high corporate tax discourages foreign direct investment in the country which is the highest for the telecom and financial institutions.
Former DCCI (Dhaka Chamber of Commerce and Industry) president Sabur Khan said there should be incentive in the budget for those who will create more employment. He also lamented that their proposals are never considered in budget preparation.
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