Dhaka, June 08: Revenue mobilization, implementation of Annual Development Programme (ADP) and boosting investment in line with the Gross Domestic Product (GDP) are the main challenges of the proposed budget for fiscal year 2018-19 (FY19), said Centre for Policy Dialogue (CPD).Suggesting for taking a well-crafted action plan to implement the budget, the civil society think-tank said major focus should be given on strengthening revenue collection, delivering public expenditure, raising allocative efficiency, improving expenditure efficacy, and ability to pursue the deficit financing programme.
Distinguished Fellow of CPD Dr Debapriya Bhattacharya came up with the observation while making a presentation titled “An Analysis of the National Budget for FY1018-19” at a press conference here on Friday.
Executive Director of CPD Fahmida Khatun made welcome remarks while its Distinguished Fellow Prof Mustafizur Rahman, research director Dr Khondaker Golam Moazzem and research fellow Towfiqual Islam Khan were present at the press conference.
Bhattacharya said the country needs investments worth Tk 117,000 more in private sector to attain 7.9 percent economic growth as projected in the national budget.
Along with it, public sector’s investment needs to be increased by Tk 30,000 crore, he said, adding that overall productivity will also have to be increased.
“It is very difficult to do so in reality. So, there is doubt about achieving the estimated growth target,” said Bhattacharya.
He said CPD has analyzed the proposed budget based on the two core objectives – counteracting the emerging stresses on macroeconomic stability and making economic growth and other achievements more inclusive.
CPD has identified some short and long term good and bad sides of the Bangladesh economy.
The short term good sides include continuation of steady growth trend, constant rise in public investment, positive growth of exports and inward remittances, containing inflation, expansion of social safety net and raising trend of foreign aid.
Weakness in boosting revenue collection, slow implementation of ADP, failure to ensure fair prices for the crops products of farmers and rise in import costs are the short term problems.
The think-tank hailed some measures such as expansion of wealth surcharge, giving policy support for industrialization, imposition of tax to ensure medical services for persons with disability and withdrawal of VAT of cheap loaf-biscuits and shoes.
But CPD criticized the government for lowering corporate tax for banks and Financial Institutions (FIs), saying that slashing of corporate tax will not have any positive impact on interest rates and liquidity crisis.
Bhattacharya suggested the government to reconsider the proposal to slash the corporate tax for banks and FIs, saying that it would not any effective role for expansion of investments in the country.
He said hiking of flat registration fee and VAT on ride-sharing UBER, Pathao would affect the ventures of young people. At the same time, it will increase the expenditures of the urban middle-class, he added.
He suggested increasing the tax free income limit to Tk 300,000, saying that it will give relief to lower-middle income people.
Bhattacharya criticized the proposal to withdraw 25 percent duty on tobacco import. The proposal to increase tax at source for brand clothes and furniture items would boost the living costs, he said.