For the FY2023-24, Bangladesh has proposed an ambitious budget of roughly Tk.7.61 trillion, an increase in spending of 15% over the revised outlay for the previous year. In order to promote the creation of a “Smart Bangladesh,” Finance Minister AHM Mustafa Kamal submitted an expansive budget to parliament on Thursday. While the budget is focused on development and growth despite the extraordinary economic challenges, it can be termed as traditional rather than innovative, and its criticism from different opposition parties and analysts also remain traditional.

If we examine the government’s proposed budget for the fiscal year 2023-2024, it is evident that the government is, as usual, relying primarily on indirect taxes like the VAT to raise revenue, which will increase inflationary pressure on those already experiencing high inflation. The government’s budget proposal is for marginally raising the tax-free income level from Tk. 3 lakh to Tk. 3.5 lakh. But they have imposed a minimum payment of Tk.2,000 for every TIN holder during tax return submission – whether they have a source of income or not in this budget. The opposition parties and the analysts are criticizing this step heavily.

There are around 74 lac TIN holders right now in Bangladesh and the government can generate at least Tk.1,480 crore through the new initiative. Considering that, even a daily laborer earns Tk.500 to 600 per day and the minimum tax payment is around Tk.167 per month, this amount will not create any significant burden on the general people. The problem is our process of paying taxes is costly as most of us have to take help from a lawyer with heavy charges. If the government can make this process easier and the taxpayers can pay their taxes through MFS and receive the certificate immediately, then paying the minimum taxes will be less troublesome. Moreover, hassles from the NBR and other authorities for the taxpayers must be eliminated.

There are few things the government should take into considerations. Almost every citizen of Bangladesh pays VAT irrespective of their social class as we purchase any kinds of product. This VAT should be considered while social benefits are provided. The VAT should be associated with TIN or even NID of every citizen and it should be treated as savings. Paid VAT of every citizen should be calculated in his VAT account. The government should provide social benefits to the citizens from the VAT and tax they paid, especially if the citizen is unemployed or disabled. The family members of a deceased citizen should also receive pension like benefits.

Our tax is being used to ensure social safety net of others but if a taxpayer requires such safety, that must be covered from his paid VAT and tax. If this system is introduced, the citizens will be more willing to pay VAT and they will also participate in monitoring the proper VAT payment process. Moreover, minimum payment of Tk.2,000 for every TIN holder during tax return submission may also be adjusted from the VAT account if the TIN holder does not have taxable income. In this way, both the government and the citizens will be beneficiary ultimately.

Moreover, citizens can create TIN for different reasons and there is a system of closing TIN under some circumstances like death, unemployment for consecutive three years etc. But the process is lengthy as well as troublesome in most cases. The government should make this process easier.

The National Board of tax (NBR) would be responsible for collecting the vast majority of the Tk. 500,000 crore tax collection objective put forth in the budget. We see no reason to think that NBR will succeed in achieving this target as they have failed for the past 11 years in a row. Though NBR is failing to reach its target collection every year, there is no accountability. The NBR should expand the reach of tax collection sources while acting as a support for the citizens rather than intimidating them. Moreover, a quarterly review for NBR, ADP etc. must be done to see the progress against the target. Additionally, there should be ‘zero tolerance’ policy for corruption of tax officials, NBR officials and tax lawyers.

The government imposed higher or lower taxes on few products during every budget. But this process should take some more thinking. For example, increasing tax on cigarettes is a common thing in every budget. We all support the idea that tobacco consumption should be reduced. But the increased tax has raised the price of each cigarette by 50 paisa to 1 taka only. This sort of price hike will not discourage the smokers. Moreover, the tobacco producers impose this extra tax totally on the users and while their revenues remain intact. They also avoid tax payment in large scale to increase their revenue. More absurd is that, the tax on cigarette is increased but that on ‘biri’ remains the same. Here, the intention of the government remains under question. Similarly, while environmental hazards are increasing, imposing tax on imported bicycle parts brings questions.

The allocation for education has declined in this FY but we need more allocation to the education sector as we need a much more educated Bangladesh to achieve the goal of ‘Smart Bangladesh’, this decline is not justified. On the other hand, the allocation for social security or safety net has increased though the distribution of this budget is always full of corrupt practices. In most of the instances, the citizens who are required to be brought under safety net, remain out of it. Hence, this increase will only remain profitable only for the corrupt ones.

It is a hard fact that, a large amount of money is laundered in foreign countries every year. The rich are opting to invest their money in different forms to foreign countries. This is largely because the regulators like Anti-Corruption Commission (ACC) and NBR often chases the money makers of the country. While we have accepted the bribe and other forms of corruption as a reality, pushing the rich to launder their money is useless. If the government acts to reduce the hassle for the rich, they might be interested to invest their money inside the country and that will boost the economy. We know, this leverage is not legit, but considering the reality of our country, the government should take such decisions to keep domestic money inside the borders.

We have increased taxes for purchasing a flat or land. For multiple cars, we have to pay additional taxes. While a citizen is paying VAT on all construction materials of a building, taking additional taxes from him for a flat or land registration is unjustified. For higher taxes, the property registration has already declined in many areas. The backward linkage industries of real estate industry, which pays heavy tax revenues, will also suffer from tax increase. These initiatives will discourage investment inside the country and will promote money laundering. If the cost of purchasing a property – land, flat or car etc. is less and the process is less complicated in foreign countries, then the people will not invest in Bangladesh. The government should take initiatives to make the wealthy group of the country to invest inside country more. They should even make lucrative investment environment for the foreigners.

Due to the COVID-19 pandemic and the Russia-Ukraine war, the global economy is under great duress. Bangladesh is also facing the heat. The current situation requires innovative thoughts, which this budget lacked. We hope the government will think out of the box while implementing the budget to reduce the sufferings of the people, especially keeping the upcoming national elections in the mind. We also hope the opposition parties and analysts will come up with innovative ideas and participate in discussions with the government rather than maintaining their traditional criticism for the sake of the country and the countrymen.

The government should focus on reducing the revenue expenditure and increasing the efficiency in the revenue collection process eliminating corruption and system loss rather than increasing taxes on the citizens in today’s context. We must ensure proper use of our resources. Only if we do that and become creative in our economic policy, we will be able to sustain our development in the near future.
The writer is Chief Editor at Mohammadi News Agency (MNA) and Editor at Kishore Bangla