The upcoming budget should look to increase the portion of direct tax in the total government revenue through better taxing of the richer and wealthier segment of the society, the leading association of the country’s economists has said.
At the same time, the association has called for taking a hard stance on black money and money laundering issue as well as increasing the portion of development budget to 55 per cent of the total budget.
The calls were made at a pre-budget press conference organised by Bangladesh Economic Association (BEA) in the capital on Sunday.
“Currently, only 46 people in the country filed a personal annual income tax return of more than Tk 10 million. Whereas, according to our research, there are at least 50 thousand people who have enough personal income to belong to this club”, said Professor Abul Barakat, former president of Bangladesh Economic Association.
“That means it is possible to earn at least Tk 500 billion as income tax from those 50 thousand people”, Professor Barakat said while calling for increasing the income tax on the richer segment of the country.
The eminent economist also called for taking a hard stance on the issue of black money and for gradually recovering the huge amount of black money through specific measures.
“The total amount of accumulated black money in the country would be around Tk 5.0 to 7.0 trillion which is around 42 to 80 per cent of the country’s GDP”, Barakat said.
“Therefore, the upcoming budget can include the provision of publishing a white paper and forming a commission to address the black money issue,” Barakat said, adding, “We propose to have a target for recovering around Tk 200 billion of black money in the upcoming budget”.
Noting that the amount of money laundered from the country each year is around Tk 700 million to Tk 800 million, BEA also called for including specific guidelines in this regard in the upcoming budget.
“We propose recovering around Tk 250 million in the next budget through resisting the rampant money laundering in the country”, Barakat said.
Bangladesh Economic Association has also called for formulating an expansionary budget where both the government income and expenditure would increase.
As per this proposed budget of BEA, the total size of the budget would be around Tk 9.14 trillion which is more than double of the budget that would be placed in the parliament on June 01.
As per this proposed budget, the revenue generation of the government would amount to Tk 7.25 trillion which is around three times higher than what the government targeted during the last fiscal.
Mr Barakat said, “68 per cent of this total revenue would come as direct tax while 32 per cent will compose of indirect taxes”. He added: “Much of this direct tax would derive from increased personal income tax and tax on profit”.
Whereas, according to the government’s last fiscal year’s budget, 47 per cent of the government’s total revenue target consisted of direct tax while 53 per cent composed of indirect taxes, he noted.
When it comes to expenditure, BEA has proposed allocating the biggest chunk in power and energy, where the allocation should be increased by 11.2 times to Tk 1.68 trillion.
At the same time, the allocation in education should be increased by 2.72 times to Tk 1.43 trillion and the allocation in health needs to be increased by 3.2 times to Tk 560 billion, BEA officials said.
“Meanwhile, the budget allocation in social security needs to be increased by 1.74 per cent to Tk 560 billion while the allocation in communication and transport sector also needs to boosted by 3.5 times to reach Tk 1.32 trillion,” Barakat said.
BEA has also proposed complete elimination of the dependence on foreign aid and has also proposed allocation of Tk 200 billion in this year’s budget for the repayment of existing loans along with interest.