Budget and the limited-income group

Protik Bardhan The allocation of money in the annual budget reflects the nature of a state. The statistics of income and expenditure of the government bespeaks the stand the state takes in determining its priorities. This article would try to locate the position of the limited-income group in the government priority list. As we all know, majority of income of the government comes from the NBR revenue. About 78 per cent is supposed to come from this source in FY 2013-14. Of this, indirect tax (VAT & other duties) accounts for 63.77 per cent, while direct tax contributes 36.22 per cent. In addition, tax net has been widened over the years. NBR imposed income tax on the savings instruments like DPS and FDRs. Some 10 per cent AIT is deducted from the profit of these instruments if there is TIN (Taxpayer's identification number), while 15 per cent is charged in case there is no TIN. It is now required in almost everything. Indirect tax is realized from people in the form of VAT on different products. That is, the lion's share of government income comes from the mass people. We also know that the big wigs always dodge the tax men. Even the tax men opine that direct tax should constitute at least 50 per cent of the tax income of the government. It is essential to strike a balance of income in the society. So, the people supposed to pay more taxes are paying less in fact. Given the situation, we the common people are contributing more to the government exchequer. Nonetheless, what have the subsequent governments offered us in the last 42 years since independence? There is hardly any assurance of even the basic necessities of life. Like other things, the basic things have also been commodified. To put the last nail in the coffin, there is no guarantee of employment in the country. Everything has to be managed at the micro level. Housing, education, treatment, food, clothing all has gone almost out of the reach of the middle and lower-income group of the society. Almost all the sectors have been privatized; the traders and dealers are simply plundering the money out of people's pockets. And in open market economy, the government has nothing to do with the market mechanism, at least in our country. No law of economics can be applied in analyzing the cases of price hike. And we are being tossed from the frying pan into the fire. However, life goes on. But this life is not worth living. We are spending almost our total income to bear the brunt of our essentials. So, the domestic savings have come down pretty sharply over the years. Due to high level of inflation, economists say that our actual income has been cut down by 35-40 per cent in the recent years. But the government never acknowledges the fact. They always defend their position citing the reason of rise in people's income. Whatever it is, less amount of savings is putting people's lives at stake coupled with the absence of any government level initiatives to ensure basic necessities. So, there is hardly any security of our lives during any disaster. One of my acquaintances recently suffered a cardiac arrest. He needed two rings in his heart, which required around Tk 0.60 million. I knew him as a pretty well-off man living in his own apartment in city's Shantinagar area. His living standard was also pretty high. To my utter surprise, his wife had to borrow from almost everyone to meet the expenses. This is the actual condition of the middle class despite availing apartments and cars. The basic necessities take away everything. However, there is a habit of over spending among us. There are some excesses which the middle class could have easily avoided. But the fact remains that there is nothing from the macro level for the people. Again, housing is simply going out of the reach of the middle and lower-income group. A meagre 0.8 per cent has been allocated for this sector. The private and state-owned commercial banks charge exorbitant rates of interest on home loans. There is a government-owned house building finance corporation, which provides home loan at 9.0 per cent interest. It is also not that available. Given the tiny allocation in this sector, government seems to be indifferent towards this sector. In Dhaka city, a middle class family has to put in almost everything to buy an apartment. Buying land in the city is not even in the imagination of people. There is nothing in the budget to provide low-cost housing to the city dwellers. To the contrary of our expectations, the provision of black money whitening has been granted in the real estate sector. And the realtors are already eyeing an increase in flat sale and its price. It would further put extra burdens on the would-be flat owners. Our government can aid the corrupt businessmen with the people's/taxpayer's money by way of providing bail out to the state-owned commercial banks to make up the loss they incurred due to huge amount of loan provisioning caused by financial scams like Hallmark, Bismillah Group and the like. But there is nothing for the people. Yes indeed, agriculture budget is curtailed compared to last year; it stands at 7.9 per cent this year; while allocation in miscellaneous head stands at 8.3 per cent. It seems obvious that government is not at all concerned about rural economy as agriculture is the soul of the said economy. However, we do not know the breakup of expenditure under this head. Government reduces duties on capital machinery to promote investment, but lack of infrastructure and political stability would come in the way of investment and employment generation. There is no government's own initiative in employment generation. Allocation in health sector goes up slightly - but far from expectations. Government is hopeful of retaining inflation rate; duties on some imported items have been reduced to this effect. But due to the lack of market monitoring and compliance, food inflation cannot be retained as usual. Allocation in social safety net rose up. It is alleged to be a political investment in the election year. In consideration of the said move, government extended the limit of taxable income from Tk 0.20 million to 0.22 million. Some waiver has been proposed on transport and house rent allowances. The limited income group may heave a slight sigh of relief at it. The health of an economy can be perceived from the indicators such as inflation rate and employment generation. It is the hallmark of a pro-people economy. To our utter dismay, our government lags behind in both the scales. Ironically, the onus of revenue income is put on the limited income group in the form of exorbitant NBR revenue income target. The government plans to facilitate domestic production as it proposes to reduce tax on capital machinery import. Had there been political stability and infrastructural development, our GDP growth rate might have risen to 8.0 per cent. It is a good sign, no doubt. But no steps are seen in the government plan to undo discrimination and facilitate the lives of the limited-income group. ............................................................... The writer is an author and translator. He can be reached at bardhanprotik@gmail.com