A few critical points on the new national budget. This is the concluding segment of a three-part op-ed
Here I offer some closing remarks upon special propositions in the budget. I hope these are clear, constructive, and concise observations/interpretations.
Huge revenue target: Proper sources need to be identified
The revenue target for the budget FY19 has been set at Tk3,39,280 crore. The new budget bears all the possibility of increased pressures upon middle class citizens, with the upper class elite enjoying the benefit of the doubt.
No matter how much the minister defends criticisms against the budget by claiming the budget to “not rock the boat,” the difficulty arises from the imposed VAT on buying small apartments, food prices, and other basic necessities.
Debapriya has offered his intuition regarding the budget by saying that high and low-income people will benefit from the budget, intrinsically leading to more votes from these two classes for the upcoming election; the tax charges are very likely to hurt the sentiments of the middle class.
Also Read- After the budget
Overall, I think before setting such a high revenue target, the budget should have been placed with proper examination of the sources from which this revenue should be collected.
The motive behind the corporate tax cut is to create an international competitive climate for global investors. Debapriya mentions that the external trade is facing much pressure and notes that if they cannot prove their consistency in maintaining exports and remittances, the rate of exchange, inflation, and interest will be affected.
Muhith has promised that the export earnings will increase by an additional $40 billion by declaring the mission of establishing 100 economic zones by 2030; to meet these economic targets, the total investment is placed at 33.54% of the total GDP.
Individual tax-payers getting no relief
The corporate tax cut has brought a sigh of relief for the influential businessmen and elite stake-holders concerned. But what about individual tax-payers? There is nothing new for individual tax-payers in our country in the proposed FY19 budget. Finance Minister Muhith has commented that raising the tax exemption ceiling will put a significant number of tax-payers out of the tax net.
Also Read- After the budget
With such a lofty revenue collection target, this statement by the Finance Ministry does not really fit in the box.
‘Implementation roadmap’ to bring down carbon emission: A climate change initiative
This year’s budget has the potential to be feasible in its eco-friendly goals. The supplementary duty imposed on plastics and poly-packaging has been greatly appreciated. Point 166 notes the preparation of an “implementation roadmap” to bring down the carbon emissions. Our humble concern is that how this roadmap will lead to the desired destination.
Housing loans for civil servants
This year’s budget has provisions for housing loans for public servants. The minister said: “We have formulated a policy guideline for providing loans from the banking system bearing in mind the fact that the government employees, especially new entrants, should own a flat or a house.” It is debated that there is already a similar policy regarding the same. So, isn’t introducing such a policy become a redundant step?
The VAT for owning a permanent address (from 1.5% to 2%) for ordinary citizens has been increased, but there will be provision of generous loans to construct houses for civil servants. How discriminatory can it get, considering that the budget has been popularly placed as a “pro-people” one?
Strategically speaking, the budget FY19 is definitely a pro-election one. But is it pro-democracy or anti-democracy? We don’t know.
Allocation for development
The budget FY19 has allocated Tk1,73,000cr for implementing the Annual Development Program, with the percentages being 26.9 for HR development (education, health, and others), 21.8 for overall agriculture, 14.3 for the power and energy, 26.3 for communication (roads, railways, bridges and others) and 10.8 for other sectors. Even though this year’s ADP implementation rate is only a mere 52.42%, Muhith has defended his stance: “It is gratifying to note that the utilization of the increasing volume of foreign aid in the pipeline has spurred the implementation of the ADP significantly.”
He also blames a failed bureaucracy to be responsible for this situation. How is this sort of governance going to establish the balance between investment and GDP, and that between revenue and deficit?
The finance minister has stated that the FY19 budget is an election-oriented one and has been designed to get people’s votes. But is the budget really going to solve their problems?
Overall, examining the budget is a rather critical role, and as an ordinary citizen, I may have failed in capturing the true essence in carving out its good sides and bad sides. However, the points detailed above made economic sense to me as a graduate of the said discipline.
It’s definitely true that this budget does not provide a “one-size fits all” solution for the Bangladeshi citizens -- however, it’s also true that it is never possible to satisfy some people irrespective of the effort being made. The strength lies in being able to sustain as well as retain the actual focus of the budget and its aimed goals.
I would like to end with a strong assertion from AB Mirza Azizul Islam: “The government should strictly stick to its target. Otherwise, fiscal management would be in trouble.”
Maisha Mehzabeen works at the Dhaka Tribune and is a graduate in economics.