THE government’s failure to properly implement a number of pledges such as a universal pension scheme, crop insurance, an increase in the tax-GDP ratio and the online submission of income tax returns, believed to have significant impact on people’s lives and the national economy, is worrying. The government made the pledges in the budgets for the past two financial years. The government pledged a universal pension scheme for all employees in both formal and informal sectors. The project is, however, yet to be even properly outlined. About 0.8 million people — all public sector employees and a small portion of private sector employees — now enjoy pension benefits while the government provides monthly allowance of Tk 500 for about 3.5 million elderly people against the total elderly population of about 14 million under a social safety net programme. This suggests that about 70 per cent of the elderly population remains outside any benefit. As for crop insurance, a valuable climate adaptation tool in Bangladesh where farmers’ livelihood is precarious, the implementation rate is dismal as the government has not extended the support and awareness has not been adequately created among farmers.
The government has not been able to increase the tax-GDP ratio, which is one of the lowest even among South Asian countries. The ratio has remained static at about 9 per cent for a decade as budgetary proposals for augmenting revenue generation have been implemented partly. The tax-GDP ratio is a significant factor for the economy as it reflects the ability to properly use available resources to ensure sustainable economic growth and to reduce income inequality. A lower tax-GDP ratio also means a higher deficit budget, which has become common in Bangladesh. This also results in a higher government borrowing to make up for the deficit that, in turn, adds to public debt. The government is reported to go for an allocation of about Tk 69,000 crore in the next budget to pay the interest on government borrowing. The amount will be the fourth biggest head in the overall expenditure. What lies at the heart of the problem is the government’s failure to enhance its tax base and improve the tax policy. The government is reported to have also failed to introduce a system for an online submission of income tax returns, which could have contributed, at least partly, to a higher tax collection.
The government must attend to the issues and deliver on its pledges to introduce the universal pension scheme for all employees in formal and informal sectors and enhance its social safety net programmes to cover more elderly people. The government must also implement crop insurance programme for farmers. The government must also attend to its other budgetary pledges such as an increased tax-GDP ratio and a system for online submission of income tax returns for a better fiscal discipline.
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