The proposed budget will largely favour well-off people while putting more burden on the middle and lower-income segment, Centre for Policy Dialogue (CPD) said on Friday.
“The tax-free income limit has been kept unchanged in the proposed budget but lower ceiling wealth surcharge has been raised,” pointed out CPD’s distinguished fellow Dr Debapriya Bhattacharya.“It means that the wealthy people got benefit whereas those who help earn money have not got that kind of benefit,” he said at a post-budget press conference a day after the budget was announced.
Finance Minister AHM Mustafa Kamal placed Tk 5.23 trillion national budget for 2019-20 fiscal year at parliament, raising wealth surcharge ceiling from Tk 2.25 crore to Tk 3 crore proving more relief for the rich.
The wealthy people have got the tax cut in buying flat and apparel exporters have also got cash incentives, but the loser farmers have not received any cash incentive as had been suggested by CPD, Dr Debapriya repented.
He said the move is also contrary to the election manifesto of Awami League government that was unveiled prior to the 11th parliamentary election held in December last.
Middle and lower income people are likely to feel the pinch of most of the fiscal measures rolled out in the budget, he added.
“Transition to a higher middle-income country will depend on what we will do for the betterment of the middle-income people. The emerging middle class is going to be the driving force,” he commented.CPD expressed concern that the new budget may fuel the growing inequality in the country, which it said might eventually erode the country’s ambitious growth expectations.
“The society where inequality expands cannot sustain today or tomorrow or it can not make any progress. But Bangladesh earned its liberation through its fight against inequality,” he stated.
He also criticized the wholesale black money whitening provision, saying: “Time has come to draw a line between undisclosed or illegal money. It is also against the spirit of the constitution.”
CPD thinks that lack of good governance is the main problem of the capital market and the banking sector, which can not be resolved through some budgetary fiscal measures only.
Implementation of new multiple-rate VAT law will be a tough job for the government as there is a scarcity of fiscal devices in the country and it is very tough to identify different vat rates.
The think tank also raised questions about the transparency of the budget, citing that tax-related data differed by Tk 19,000 crore between NBR and the finance ministry’s estimate.
Besides, the budget did not mention who or how much will be taxed or who or how much tax are exempted, it argued.
The plan of providing jobs to 3 crore people in the next 11 years or bringing one crore people under the tax net in a short period is vague as no action plan has been declared for these initiatives, they also observed.
CPD claimed that devaluation of taka against the US dollar could have provided more impetus to exports and remittance inflow through formal channels instead of offering cash incentives.
The weakness of Annual Development Programme (ADP) is that it is still dependent on credit and 72 per cent of ADP money went to five sectors like communications, physical infrastructure and energy sector while the rest 12 sectors got less than 30 per cent resources.
Achieving higher growth through setting up infrastructure with increased public spending is a “pre-historical concept,” according to Dr Debapriya.
In his budget proposal, the finance minister has failed to address the financial management pressure the economy is going through, he observed.
“Even though innovation was found in budget presentation, it was absent in proposals,” Dr Debapriya remarked.