BANGLADESH NEWS
The government has done injustice to taxpayers by increasing the minimum individual tax without raising the tax-free income threshold and also by imposing new tax on mobile phone users, the Centre for Policy Dialogue said yesterday.
The research organisation's comment came a day after the finance minister placed the national budget for fiscal 2012-13 in parliament.
CPD has also identified a shift in subsidies from agriculture and food sector to power and energy, which may create disparity between the rich and the poor. The think-tank is also against the scope for whitening undisclosed money.
“We are sorry to see no change in personal income tax threshold, which remains at Tk 1,80,000. But the minimum tax has been raised to Tk 3,000 from Tk 2,000,” Debapriya Bhattacharya, distinguished fellow of CPD, said at a press briefing at Brac Centre Inn in the capital yesterday.
CPD Executive Director Prof Mustafizur Rahman gave welcome speech at the post-budget briefing that focused on income and talk-time taxes that affect the general public.
On the imposition of 2 percent tax at source on mobile bill (both post-paid and prepaid), the think-tank said it was not justified from the view of social justice.
“If the government is keen to raise taxes, it should go for 'ability-to-pay' method and find ways to impose taxes on uses of various services by the people with more resources,” said CPD.
Debapriya said the government had opted for "easy tax", which is flat and can be collected faster. “But it is neither efficient nor sustainable.”
According to him, the government has failed to find out innovative ways to increase tax collection.
Land tax, which has been proposed to be deducted at source at 3 to 5 percent depending on the location, would lead to a rise in land prices, he added.
While imposing taxes, the government should follow the progressive method, meaning that the higher income group will pay higher taxes.
CPD also proposed reduction of export tax to 1 percent from 1.2 percent, but increasing farm subsidy.
The think-tank said the speech of the finance minister did not reflect the problems arising from the macroeconomic management in the outgoing fiscal year.
Falling investment is one of those problems, which CPD says got no attention in the budget. The monetary growth targets do not match the envisaged growth-investment target.
Also got little or no attention are the construction of Padma Bridge, projects under public-private partnership, containing inflation and fiscal consolidation, among others.
Rising payments for interests is also becoming a burden on the government.
Fiscal framework, price adjustment policy, privatisation and reforms of state-owned enterprises, possible income from Bangladesh-India transit and analysis on the IMF loan were either incomplete in or absent from the budget, the CPD analysis found.
Though the budget seems "grammatically okay", its inconsistencies will surface during implementation.
“Financing structure looks very ideal, but if the government can manage it is a big question,” said Debapriya.
Nevertheless, the CPD hailed the finance minister for his plan to reduce public expenditure in line with the income. Five percent deficit of GDP is not that big, it said.
Replying to a query, Debapriya said the proposed budget was not at all an election budget as the government reduced allocation for social safety net schemes that are generally employed to woo voters.
“The credibility of the budget will largely depend on its implementation, which requires a revolutionary change in the implementing agencies,” he said.
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