Production cost, inflation to go up: CPD

The Centre for Policy Dialogue (CPD), a civil society think-tank, fears the new budget would impose a tax burden on the lower- and middle-income people. The proposed new overall tax structure will hike production costs and consumer expenditure, and cause a rise in inflation in the coming fiscal year, said the research institution at a post-budget press conference held at a city hotel yesterday. The globally renowned think-tank observed that the proposed budget for the 2017–18 fiscal year increased taxes in sectors from where it was easy to mop up revenue, but would ultimately increase the tax burden on honest taxpayers.
“We agree with the expectations and desires of the proposed budget, but it lacks specific directives regarding its implementation. We expect a concrete plan and directives from the ministry of finance and planning soon,” said Dr Debapriya Bhattacharya, a distinguished fellow at the CPD.
He said tax had been increased on making bank deposits and the purchase of air tickets, but the budget lacked effective measures against those laundering money abroad.
He said the imposition of additional taxes on honest taxpayers was not ethically proper. The budget would impact the lower- and middle-income people, he added.
Dr Bhattacharya, a macro-economist and public policy analyst, alleged that the budget lacked clear information in certain areas.
He also expressed his doubts about the competency required for a successful implementation of the budget, saying an institutional policy environment was needed for that.
“There is no specific working plan in the budget to implement the annual development programme (ADP) or the overall budget. There are scattered opinions in different places but no specific plan,” he said.
The CPD fellow said there should be a working plan and a base to increase revenue expenses up to one-and-a-half times and revenue collections to 40 per cent. He feared an increase in inflation during the next fiscal year due to a hike in rice prices without any corresponding reduction in oil prices.
A spike in inflation would impact all sectors, including growth and investment, he said.
Bhattacharya termed the proposed budget an “economic illusion”, saying there was no clear parity between income and expenditure.
He alleged there were huge discrepancies in some important statistical data, including employment figures, the number of taxpayers, and revenues, in the proposed budget.
The growth rate of the gross domestic product (GDP) has been set at 7.4 per cent for the next financial year and inflation is expected to come down to 5.5 per cent. “But we see there are concerns about the inflation rate rising above that of the outgoing year,” he said.
He said the implementation of the budget was hardly possible by administrative steps alone and emphasised the participation of people’s representatives in the exercise.
Prof. Mustafizur Rahman, also a CPD distinguished fellow, said any budget of a democratic government could be seen as being pro-election and oriented towards people’s welfare. He, however, expressed displeasure over the proposed tax structure, saying that many products had been kept out of the purview of value added tax (VAT) while proposing a 15 per cent VAT for the next three years.
Dr Fahmida Khatun, executive director of the CPD, conducted the event, while CPD research director Khandaker Golam Moyezzem and senior researcher Taufiqul Islam also spoke, among others.

Production cost, inflation to go up: CPD

The Centre for Policy Dialogue (CPD), a civil society think-tank, fears the new budget would impose a tax burden on the lower- and middle-income people. The proposed new overall tax structure will hike production costs and consumer expenditure, and cause a rise in inflation in the coming fiscal year, said the research institution at a post-budget press conference held at a city hotel yesterday. The globally renowned think-tank observed that the proposed budget for the 201718 fiscal year increased taxes in sectors from where it was easy to mop up revenue, but would ultimately increase the tax burden on honest taxpayers. We agree with the expectations and desires of the proposed budget, but it lacks specific directives regarding its implementation. We expect a concrete plan and directives from the ministry of finance and planning soon, said Dr Debapriya Bhattacharya, a distinguished fellow at the CPD. He said tax had been increased on making bank deposits and the purchase of air tickets, but the budget lacked effective measures against those laundering money abroad. He said the imposition of additional taxes on honest taxpayers was not ethically proper. The budget would impact the lower- and middle-income people, he added. Dr Bhattacharya, a macro-economist and public policy analyst, alleged that the budget lacked clear information in certain areas. He also expressed his doubts about the competency required for a successful implementation of the budget, saying an institutional policy environment was needed for that. There is no specific working plan in the budget to implement the annual development programme (ADP) or the overall budget. There are scattered opinions in different places but no specific plan, he said. The CPD fellow said there should be a working plan and a base to increase revenue expenses up to one-and-a-half times and revenue collections to 40 per cent. He feared an increase in inflation during the next fiscal year due to a hike in rice prices without any corresponding reduction in oil prices. A spike in inflation would impact all sectors, including growth and investment, he said. Bhattacharya termed the proposed budget an economic illusion, saying there was no clear parity between income and expenditure. He alleged there were huge discrepancies in some important statistical data, including employment figures, the number of taxpayers, and revenues, in the proposed budget. The growth rate of the gross domestic product (GDP) has been set at 7.4 per cent for the next financial year and inflation is expected to come down to 5.5 per cent. But we see there are concerns about the inflation rate rising above that of the outgoing year, he said. He said the implementation of the budget was hardly possible by administrative steps alone and emphasised the participation of peoples representatives in the exercise. Prof. Mustafizur Rahman, also a CPD distinguished fellow, said any budget of a democratic government could be seen as being pro-election and oriented towards peoples welfare. He, however, expressed displeasure over the proposed tax structure, saying that many products had been kept out of the purview of value added tax (VAT) while proposing a 15 per cent VAT for the next three years. Dr Fahmida Khatun, executive director of the CPD, conducted the event, while CPD research director Khandaker Golam Moyezzem and senior researcher Taufiqul Islam also spoke, among others.