Rising inequality and stagnation in private sector investment should be addressed in the next budget to achieve sustainable economic growth, said speakers at an event yesterday.
Not all segments of the society are enjoying the benefits of GDP growth, with the inequality widening, said Faruq Ahmad Siddiqi, former chairman of the Bangladesh Securities and Exchange Commission.
“The alarming rise of inequality will be a threat to social stability,” he said at a budget discussion organised by the Institute of Chartered Accountants of Bangladesh (ICAB) and Prothom Alo at the ICAB office in Dhaka.
In recent years, there has been a tendency to take on ambitious budgets that eventually are not implemented.
“So, the government should take a credible budget that can be implemented.”
The low revenue collection is the main problem for the budget implementation, Siddiqi said, while placing the blame on the National Board of Revenue.
Tax rebate for stock market investors will not help in boosting the market, he said, while citing the 10 percent tax rebate for companies for listing to further his point.
“Still, no companies are willing to come,” he added.
The NBR is planning to increase its manpower and the number of offices across the country to enhance revenue collection next year, said its Chairman Md Mosharraf Hossain Bhuiyan.
The government has to give tax exemption to the priority sectors during its graduation from the least-developed country bracket.
“Currently, the power sector is the priority sector. The sector was given all kinds of tax exemption.”
There is pressure to slash the corporate tax, but the NBR has to find alternate sources of revenue before providing any exemption.
Besides, corporate tax was reduced last year and a certain community was benefitted from it.
“Though it was said that lower tax rates will increase revenue, in reality it did not happen,” he added.
Private sector investment will have to go up to increase employment, said Fahmida Khatun, executive director of the Centre for Policy Dialogue.
For the last one decade, private investment to GDP ratio has been stuck at 21 to 23 percent. For instance, in fiscal 2017-18 it was 23.26 percent of GDP, according to the Bangladesh Bureau of Statistics.
Youth unemployment rate is about 11 percent, which is alarming. She also called for raising the tax exemption limit to adjust for inflation as the last time the ceiling was adjusted was in 2016. The budget allocation to the health and education sectors is very insignificant, said Rasheda K Chowdhury, former adviser to a caretaker government.
“The government's lower emphasis on social investment is widening the inequality,” she added. Increasing the number of taxpayers is needed for graduation to the middle-income country bracket, said AF Nesaruddin, president of ICAB.
Currently, 35 lakh people hold tax identification numbers but only 20 lakh pay income tax. A huge number of VAT-registered businesses did not come under online registration.
“They should be brought under online registration to encourage return submission,” he said.