Economists and experts on Thursday demanded taking measures in the national budget for the upcoming fiscal year of 2019-2020 to reduce rising inequality between the rich and the poor in Bangladesh.
At a roundtable discussion on the next budget, they also sought higher allocation for education and health, and imposition of income tax on all eligible people and introduction of inherence tax to reduce inequality.
Institute of Chartered Accounts of Bangladesh and Prothom Alo jointly organised the discussion at the ICAB auditorium in capital Dhaka.
Centre for Policy Dialogue executive director Fahmida Khatun said that the country was registering consumption-based GDP growth, which was not expected for emerging economies like Bangladesh.
Bangladesh requires investment-led growth but the rate of private investment remains stagnant despite a rise in public investment, she said.
Higher unemployment rate (10.6 per cent) among the youths against the national level (4 per cent) is also worrying for the country, she said, adding that the situation would not improve without a quantum jump in investment.
She said that the existing tax structure was one of the important reasons for the rising inequality between the rich and the poor.
She recommended imposition of inherence tax or wealth tax and increasing tax-free income limit for individual taxpayers, among other measures, for reducing the inequality.
ICAB council member Md Shahadat Hossain said that the rate of inequality was rising in the country due to unabated corruption, low base of income tax, higher burden of indirect tax, rising inflation and irregularities in the banking system.
Economy grew by over 45 per cent in last five years while inequality between the poorest and the richest also magnified in the period, he said.
Referring to study reports, Shahadat said that the richest 5 per cent of the households became 121 times richer than the poorest 5 per cent in last five years while the difference was 32 times five years ago.
He suggested that the upcoming budget should address the issue seriously.
Former adviser to a caretaker government Rasheda K Chowdhury recommended imposition of education cess to finance development of education, at least the primary education.
She emphasised increasing investment on education and health, and preventing corruption and violence against women to reduce inequality.
Corruption eats up 2 per cent of gross domestic product while violence against women takes away another 2 per cent, she said.
Arguing in favour of imposition of education cess, she said that India got satisfactory results in mobilising funds for investment in education by imposing education cess.
National Board of Revenue chairman Md Mosharraf Hossain Bhuiyan said that they would consider introduction of inherence tax as it was a good proposal.
NBR will also make submission of income tax returns by candidates at any national and local government elections mandatory in future as candidates spend huge amount of money in electioneering, he said.
Former Bangladesh Securities and Exchange Commission chairman Faruq Ahmad Siddiqi said that income inequality was rising at an alarming rate as the benefit of growth was not reaching equally to all.
The existing tax structure is also responsible for rising inequality between the rich and the poor as NBR failed to achieve the main function of redistributing income through income tax, he said.
He also said that country’s tax policy, monetary policy and the budget did not have any impact on the capital market.
Benefits given to the stock exchanges also do not help the market as investors do not get the benefit of tax incentives, he said.
ICAB vice-president Md Salim Uddin, also the chairman of Bangladesh House Building Finance Corporation, said that the rate of employment generation and poverty reduction was slower compared with the rate of economic growth.
Bangladesh Institute of International and Strategic Studies research director Mohammad Mahfuz Kabir recommended imposition of specific duty on tobacco products including cigarettes.
NBR can earn additional several hundreds crore by restructuring the tobacco taxation, he said.
ICAB taxation and corporate law committee chairman Md Humayun Kabir conducted the session where Bangladesh Association of Software and Information Services vice-president Mushfiqur Rahman, former ICAB president Kamrul Abedin, ICAB member Raihan Shamsi, ICAB taxation and corporate law committee member Snehasish Barua and Bangladesh Merchant Bankers Association president Mohammad Nasir Uddin Chowdhury spoke, among others.
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