The government should put an emphasis on human capital development through quality education, tax ratio to GDP and new driving force of economy in the upcoming budget for inclusive and sustainable growth.
Trade analysts, economists and academics came up with the recommendations at a Capacity Building Workshop on Budget Reporting for Journalists in Dhaka on Tuesday.
They also stressed the implementation of budget as it is going through continuous declining trend for the past few years.
“Increasing tax to Gross Domestic Products (GDP) ratio is a big challenge, which remains at a single digit,” said former Bangladesh Securities and Exchange (BSEC) chairman Faruq Ahmad Siddiqi.
The government should focus on policy reforms in this regard. Value Added Tax (VAT) and income tax would be the next source to revenues as earnings from customs duty are on the wane, said Faruq, also former commerce secretary.
Usually, corporate tax system is simple across the globe, but in Bangladesh it is a complex issue and a little bit higher, he added.
“There are several slabs in our corporate tax system such as 25% for publicly traded company, 35% for publicly non-traded companies while separate slabs for financial sector and non-financial sector.”
To earn more revenues, corporate tax system should be simplified to draw investment from home and abroad, the former bureaucrat said, stressing that policy reforms are a must.
Implementation of rules is very important to prevent tax evasion, or else, no ratio would be viable for the government to collect revenues, he added.
“In the budget, the government gives importance on new investment, but does not concentrate on the maintenance of existing projects,” said former adviser to the caretaker government, Wahiduddin Mahmud.
If investment is not made for the maintenance of existing projects, how will the new projects come into being and see success? he posed a question.
“Implementation of budget shows continued decline,” said Mohammad Ali Taslim, professor of Dhaka University, Department of Economics.
The government has to increase efficiency of implementation. In the last fiscal year, budget implementation was 76.26%, which was 80.92% in the previous fiscal year.
“The size of budget is a reflection of the government aspiration, but the efficiency of budget implementation is very much needed to materialise the aspiration,” said Hossain Zillur Rahman, chairman of Power and Participation Research Centre.
In the upcoming budget for the fiscal year 2017-18, the government has to think about the present status of driving force of the economy, which contributes to the growth, he added.
In parallel with the existing growth driver, the government has to mull over new economic growth driver, plus concentrate on human capital development through ensuring equality education, said Zillur, also a former adviser to caretaker government.