Budget: Placating both the rich and the poor

Finance Minister AMA Muhith placed the national budget involving Tk 2.50 trillion for the fiscal year 2014-2015 at the Jatiya Sangsad on June 05. Over the last five years the budget size has increased by about 250 per cent. Wise men have termed the budget for the next fiscal 'highly ambitious'. But if the previous budgets are analysed, it will be found the rate of growth has been uniform and the deficit is hovering around 4-5 per cent of the GDP (gross domestic product). The general service has received the highest allocation. Tk 590.58 billion (23.58 per cent) has been earmarked for it, up by Tk 100 billion from that of the current fiscal year. Tk 125.57 billion (5.01 per cent) has been allocated under the head 'public order and safety'. The education sector receives the third highest allocation, as 'general service' and 'interest payments' occupy the first and second positions respectively.
The present government is convinced that if government officials are paid handsome salaries, they will be less prone to financial corruption. By judging from the trend of corruption prevailing in the country, can the border line be drawn between honesty and corruption? Do the corrupt officials take recourse to corruption for the sake of survival only? Their demands are high. They want to give education to their children abroad and they need luxurious flats in posh residential areas. They celebrate Eid and other festivals abroad, let alone their life in luxury at home. Their thirst is like that of the blind giant of the mythical character Ulysses.
Moreover, the government has also not framed any policy on its expenditure indicating a reasonable limit, if not austerity. Costly and high fuel-consuming transports have been supplied for the lowest tier of administration.
The Finance Minister has mentioned the spirit of the Liberation War. The people of Bangladesh fought for a secular, democratic and economically exploitation-free state. The minimum medical facility is yet to be ensured for the common people. The budget allocation for the health and family welfare sector is 4.45 per cent only. Of course, the bureaucrats and the public representatives go abroad for their medical treatment. So, is a paltry amount of Tk 111.46 billion (11,146 crore) out of the Tk 2.50 trillion is enough for the common people?
Under the proposed budget the Local Government Division will receive Tk 154.64 billion or 6.17 per cent. The amount is reasonable. But for what type of local government has this been earmarked? The Finance Minister has promised in his budget: "we will take a holistic approach encompassing all relevant issues to make the local government institutions more powerful and equally responsible." But is the government moving in that direction? Is the Upazila Nirbahi Officers (UNOs) are running a parallel administration under the banner of upazila administration and are the local MPs their mentors. An UNO is the 'Viceroy' of the central government.
Election to district councils is yet to be held. Already an administrator has been appointed for every district council apart from the all powerful deputy commissioners. We have to wait and see how the central government tries to protect its interest.
All functions of the Local Government Engineering Department (LGED) are concentrated at the head office in Dhaka. The result has been a surge in corruption in selecting development projects as reported by the Transparency International Bangladesh (TIB). The amount of money earmarked for the Local Government Division will be spent by maintaining minimum transparency and accountability, if elected representatives of the people are at the helm of local government institutions.
It is heartening to note that the limit of spending under corporate social responsibility (CSR), which is tax-free, has been proposed to be raised. But strict monitoring will be required so that the amount of spending on CSR is not used with any ulterior motive. Three committees should be formed-one each at Bangladesh Securities and Exchange Commission (BSEC), Bangladesh Bank, and Insurance Development and Regulatory  Authority (IDRA)-for supervising and monitoring CSR activities of general listed companies, banks and insurance companies respectively.
It has been proposed in the budget that the landlords who charge more than Tk 25,000 in rent for a single living unit will have to receive the same through a bank to be assigned by the house owner. It is a naive proposal. Have the authorities ensured the existence of a deed on the rent between the landlord and the tenant? If it exists at all, the actual rent is never mentioned. The language of the deed is chosen by the landlord, not the tenant. The tenants are just hostage to the landlords. First of all, the government will have to ensure that no house is let without any written document. Unless it is done, the NBR should fix a rate on the basis of floor space of a unit. Intelligence units should do this with the help of a team, not an individual. If the NBR is sincere to collect adequate revenue from this sector, its detective and intelligence units will have to work seriously so that the land owners properly follow the laws and rules.
Some newspapers have raised an alarm that firms will move away from the stock exchanges because of the corporate tax structure. Some wise men expected that the 'tax on banks, insurance and financial institutions' would be reduced. These companies pay tax at the rate of 42.5pc while publicly-traded companies pay 27.5 per cent tax (subject to certain conditions).
In the proposed budget the corporate tax structure has remained same except one change. A non-publicly traded company will pay tax at the rate of 35 per cent instead of 37.5 per cent. It should be remembered that banks, insurance companies and financial institutions are listed with stock exchanges, as it is a condition for obtaining a licence. On the other hand, over the last three decades the government has been providing different incentives for making the share market vibrant.
While placing budgets earlier, the government talked loudly about poverty alleviation and social safety nets. But this time attempts have been made to appease the rich. Cars have been made cheap. The VAT rate has been raised for ordinary restaurants, but not for air-conditioned ones.
Another classification has been there. Some rich persons will be known as super rich and higher surcharge will be imposed on their income. Definitely it is dignified to be a super rich man. According to a great Chinese leader, it is glorious to be rich. Anyway, the government is trying to be equally popular with both the rich and the poor.
rezaulparvaz@live.com