FY 2021-22: Budget thoughts
Revenue collection should not be the main goal of the government under the prevailing circumstances. Instead, it should think about how best it can save life and livelihood, Dr A. K. Enamul Haque, Professor of Economics at the East-West University (EWU) said recently.
In an interview with the FE, Dr Haque felt that companies that could create jobs during the pandemic deserve incentives from the government.
Asked what should be the nature of the budget for the next fiscal, he said the government needed to shun the traditional way of budget-making in a desperate situation like the present one.
Of course, he said, the top priorities for the government should be economy and health. But, he said, protecting jobs and ensuring uninterrupted economic activities might prove to be tough challenges for it.
So, he said, while offering incentive packages to industries, the government must keep in view how best that can protect jobs. It would be the best way to reduce the burden on the government, Dr Haque added.
Dr Haque said the large informal sectors of the economy, self-employed people in the transport, retail and service sectors as well as the private sectors providing jobs to millions must be on the list of government priorities in terms of fiscal supports. They should be brought under a unified platform for a new kind of social security system, he added.
Dr Haque said the companies that contributed to job creation during the pandemic should be incentivized by reducing tax rates. They effectively reduced the burden on the government, he added
He said the government should incentivise all sectors to adopt digital platforms to receive any financial support.
“To reduce corruption, I would suggest measures that include: a) adoption of blockchain technology in digital transactions, b) legalisation of digital currency or payment structures, and c) reduction of cash transactions drastically.
“The Bangladesh Bank should be instructed to introduce a legal structure to legalise digital transactions. Companies adopting digital transactions using credit cards, debit cards, digital wallets must be given tax cuts and this will reduce pilferage in tax payments and will drastically reduce tax evasion in the economy.”
Asked what the government should do to get more revenues from the sectors that have been making large contributions to the economy, Dr Haque said, “I believe, for the current and the next fiscal years, revenue collection should not be the main goal of the government. This is a national emergency and so it is more important for the government to ensure that people are supported in protecting their life and livelihood first.”
Turning to the agricultural sector, he said traditional agriculture does not have a big future in Bangladesh. It is a mixture of agriculture and industry that is important. If agricultural produce is not processed by the manufacturing sector, the gains from our agriculture would be lost.
“Today’s farmers are no longer subsistence farmers. They have invested in crop production, fish, dairy, poultry, vegetables, fruits, etc. The investment will not bring returns if the supporting manufacturing sectors do not grow. I think it is wrong to ignore the agro-based industries during the pandemic period. It is the agro-based industries that eventually stabilise the market and allow farmers to receive the right price. Without them, there will be a seasonal glut in the market and farmers will lose out. Government should include incentive packages for agro-based industries for ensuring agricultural growth.”
Asked about the businesses’ demand for slashing the corporate tax rates, he said ” I have already mentioned that corporate tax cut must bring corresponding benefits for the economy. For example, companies investing in research and development should receive tax cuts as it will increase jobs for educated youths. Corporate bodies registering patents in Bangladesh must receive tax breaks because it will bring future benefits to the economy. Companies increasing jobs must receive tax cuts. Corporate bodies investing and re-investing in Bangladesh must receive special tax cuts. This will be a win-win solution for the economy.”