UNB, Dhaka :
Unnayan Onneshan (UO), an independent multidisciplinary think-tank, has said the proposed budget for 2018-19 fiscal year lacks measures necessary to address the macroeconomic, medium term and institutional challenges the economy is facing.
“The budget speech seems to lack providing prudent and farsighted solutions to the current challenges except it earmarks ambitious targets of expenditure amidst inefficient distribution of resources and cost overrun,” it said its rapid assessment of the new proposed national budget.
Inequality has widened on the back of the gap between return on capital and return on labour on the one hand and the persistent primitive accumulation in the form of looting in different sectors of the economy on the other, the think-tank said.
Institutional fragility has been evident in the economy, leading different economic sectors to fail to maintain discipline, it said, adding that institutional fragility and political uncertainty are contributing to lack of confidence among investors and entrepreneurs.The UO said in the wake of parliamentary elections, investors may adopt wait-and-see policy about making investment since they are fearful about the process of the transition of power and the subsequent business environment recalling the situation after the national election back in 2014.
It said incapacity to implement the budget has been a major challenge in recent years. The rate of implementation has assumed a decreasing trend since FY 2011-12. In FY 2011-12, budget implementation rate was 93 percent which decreased to 91 percent in FY 2012-13, 85 percent in FY 2013-14, 82 percent in FY 2014-15, 81 percent in FY 2015-16 and 79 percent in FY 2016-17.
Despite the increasing trend in tax revenue over the years, the tax-GDP ratio is very low compared to global average. In FY 2015-16, Tax-GDP ratio in Bangladesh stood at 8.98 percent, while it increased slightly to 9 percent and 10.39 percent in FY 2016-17 and FY 2017-18 respectively.
Bangladesh has a regressive tax structure where people with low income have to share relatively larger share of the tax burden due to different forms of indirect taxes. In 2018-19 budget, revenue from income tax and VAT has been estimated to be Tk 100,719 crore and Tk 110,555 crore respectively. In FY 2018-19, 34 percent of total NBR revenue would come from taxes on income and profit whereas 53.79 percent would come from indirect sources, including Value Added Tax and Supplementary Duty, together.
The budget has set a target of collecting Tk 339,280 crore as revenue receipts. The target seems to fall short since a gap between revenue target and actual collection has been regular, the think-tank said.
In the first nine months of the current fiscal year, the revenue collection stood at Tk 144,000 crore against a target of Tk 167,000 crore leaving a shortfall by Tk 23,000 crore.
About the rising operating expenditure, the UO evinces that in the budget for FY 2018-19, a total of Tk 112,266 crore has been proposed for salary and allowances and interest repayment which constitutes 24.17 percent of the total budgetary outlay. In addition, in the proposed budget for FY 2018-19, operating expenditure grows by 21 percent while development expenditure registers a 13 percent growth.
It mentioned that it has been regular phenomenon in Bangladesh that the mass people fear national budget. This is because budget has been the occasion of increase in price of many necessities either directly or indirectly.
Unnayan Onneshan (UO), an independent multidisciplinary think-tank, has said the proposed budget for 2018-19 fiscal year lacks measures necessary to address the macroeconomic, medium term and institutional challenges the economy is facing.
“The budget speech seems to lack providing prudent and farsighted solutions to the current challenges except it earmarks ambitious targets of expenditure amidst inefficient distribution of resources and cost overrun,” it said its rapid assessment of the new proposed national budget.
Inequality has widened on the back of the gap between return on capital and return on labour on the one hand and the persistent primitive accumulation in the form of looting in different sectors of the economy on the other, the think-tank said.
Institutional fragility has been evident in the economy, leading different economic sectors to fail to maintain discipline, it said, adding that institutional fragility and political uncertainty are contributing to lack of confidence among investors and entrepreneurs.The UO said in the wake of parliamentary elections, investors may adopt wait-and-see policy about making investment since they are fearful about the process of the transition of power and the subsequent business environment recalling the situation after the national election back in 2014.
It said incapacity to implement the budget has been a major challenge in recent years. The rate of implementation has assumed a decreasing trend since FY 2011-12. In FY 2011-12, budget implementation rate was 93 percent which decreased to 91 percent in FY 2012-13, 85 percent in FY 2013-14, 82 percent in FY 2014-15, 81 percent in FY 2015-16 and 79 percent in FY 2016-17.
Despite the increasing trend in tax revenue over the years, the tax-GDP ratio is very low compared to global average. In FY 2015-16, Tax-GDP ratio in Bangladesh stood at 8.98 percent, while it increased slightly to 9 percent and 10.39 percent in FY 2016-17 and FY 2017-18 respectively.
Bangladesh has a regressive tax structure where people with low income have to share relatively larger share of the tax burden due to different forms of indirect taxes. In 2018-19 budget, revenue from income tax and VAT has been estimated to be Tk 100,719 crore and Tk 110,555 crore respectively. In FY 2018-19, 34 percent of total NBR revenue would come from taxes on income and profit whereas 53.79 percent would come from indirect sources, including Value Added Tax and Supplementary Duty, together.
The budget has set a target of collecting Tk 339,280 crore as revenue receipts. The target seems to fall short since a gap between revenue target and actual collection has been regular, the think-tank said.
In the first nine months of the current fiscal year, the revenue collection stood at Tk 144,000 crore against a target of Tk 167,000 crore leaving a shortfall by Tk 23,000 crore.
About the rising operating expenditure, the UO evinces that in the budget for FY 2018-19, a total of Tk 112,266 crore has been proposed for salary and allowances and interest repayment which constitutes 24.17 percent of the total budgetary outlay. In addition, in the proposed budget for FY 2018-19, operating expenditure grows by 21 percent while development expenditure registers a 13 percent growth.
It mentioned that it has been regular phenomenon in Bangladesh that the mass people fear national budget. This is because budget has been the occasion of increase in price of many necessities either directly or indirectly.
