‘Middle-class, poor hit hard by tax burden’

The country’s budget is dependent on value-added tax (VAT) that directly affects the middle-income and poor groups, said eminent citizens at a post-budget discussion yesterday.

They also said the government is increasing purview of this indirect tax instead of taking steps to build capacity of revenue officials to increase direct tax collection.

Shushashoner Jonno Nagorik (Shujan), an organisation working for good governance, held the event at Jatiya Press Club.

The discussants also viewed that the rich and poor buy products at the same price and have to pay the same amount of VAT.

While presenting a keynote paper, economist Rashed Al Mahmud Titumir said, “Statistics shows that 68 percent people who have the capacity to pay tax are out of tax net.

Tax burden is increasing on the middle-class and poor, he said. “VAT collection was Tk 23,078 crore in 2009-10 fiscal and the target in the budget for incoming fiscal year is estimated at Tk 1,10,555 crore” he added.

Titumir said the government must find out how measures can be taken based on individual income. “Dependence on VAT will create more discrimination,” he added.

The education and health sectors are neglected in the proposed budget. Out-of-pocket expenditure for healthcare in Bangladesh is more than other South Asian countries, he said. Also, farmers are not getting a fair price for their production.

Professor Anu Muhammad said the government had success only in realising VAT over the years. “VAT collection increased six folds in 10 years,” he said.

The eminent economist suggested that the government introduce January-December or April-March as the fiscal year instead of July-June to boost development works.

Budgetary funds are wasted due to starting the fiscal year from July and development work is being hampered because of monsoon, he said.

Anu Muhammad said the overall situation in implementing mega projects has taken an acute turn. The government spends two-three times higher than US and China to construct high-rises, highways and bridges, he alleged.

He criticised the finance minister for keeping a provision in the proposed budget to legitimise black money.

Shujan President M Hafizuddin Khan underscored the need for reforming the budgetary system to achieve the country’s desired goals. According to the constitution, lawmakers have no power except for passing the budget through voice vote in the parliament, he said.

Ganasamhati Andolan Chief Coordinator Zonayed Saki said the government proposed the budget to appease a vested quarter. He also criticised the government for its failure to stop money siphoning.