Tuesday, 5 July, 2022

Low, middle-income people ignored in proposed budget

Says Citizen’s Platform for SDGs

  • Staff Correspondent
  • 20 June, 2022 12:00 AM
  • Print news

Interests of the middle class and low-income people have been ignored in the proposed FY 2022-23 budget, said Citizen’s Platform for SDGs, Bangladesh.

  “Corporate taxes have been curtailed in the budget but the individual tax-free income limit has been kept unchanged for two years. This highlights class viewpoints,” said Dr Debapriya Bhattacharya, Convenor of the platform. 

"There was no consolidated thought or strategy in the budget to contain inflation which is affecting most of the fixed income or lagging people," he explained.

Dr Debapriya said, “Now, the middle class lacks any political representation or is socially gurdianless.”    

His comments came during a press conference titled "National Budget 2022-2023: Is there anything for the marginalised?" organised by Citizen’s Platform for SDGs, Bangladesh at the conference room of Brac Centre Inn in Dhaka on Sunday.

Dr Debapriya said the low and limited income people, middle class and those who lag behind economically are the worst sufferers of macroeconomic instability. 

But the proposed tax structure will hurt this segment the most as 46 percent of taxes have been estimated to come from indirect tax while the projection for direct tax is 32 percent, according to the noted economist.

  Taxes have been raised on things that people from the middle-class use, such as smartphones, laptops, water purifiers and refrigerators, he added.

 If such measures were taken to protect the local producers, some measures should have been taken for the benefit of the middle class, those who use these products, said the economist.

 He said that the middle class that has emerged over the past decade has been neglected in terms of income, education, health and social safety.

 He said that even if the amount of subsidy is increased to 54 percent in the budget, the poor and middle class will not be benefitted much as a large part of it goes to the power sector.

 On the other hand, there was no assurance that energy and electricity prices won’t rise next fiscal year, the platform leader said. 

Though the allocation for the social safety net was increased from last fiscal, it still decreased compared to the GDP and the budget this fiscal. The poor are also being neglected in the social safety net allocation, Dr Debapriya Bhattacharya added.

Excluding the pension allocation for government employees, the actual allocation for social security has been reduced by about Tk30 billion.

  "A Tk 500 allowance a month means nothing for a family or a person in need. We had urged the government to increase the allowance to Tk1,000 but that did not happen. Unemployment allowance was also not introduced", Dr Debapriya told the press conference.

 "Despite the promise of a universal pension scheme, there is no allocation in this sector. Law is also needed for this purpose. "I did not see any allocation for enacting this law either," said the economist.

 He added that there are many components such as interest on social security, pensions, project assistance,

which are not appropriate to be included under social security schemes.

 Dr Debapriya termed the budget “retraintive ambition” as, he explained, the finance minister tried to achieve higher 7.5 percent GDP growth with 31.5 percent investment of GDP, which is down from 31.7 percent of FY 2021-22. The plan for huge bank borrowing will definitely squeeze room for private credit growth, keeping it low.

He suggested keeping the market-based exchange rate partially to avoid exchange rate volatility as a tool for containing inflation and protecting poor people from further erosion in their purchasing power. 

At the same time, the government should not delay taking loans from the IMF to fix the exchange rate volatility, which was a major mistake of Sri Lanka, Dr Debapriya warned.

Citizen’s Platform also termed the clemency for the laundered money "an immoral, politically whimsical and economically worthless step."