an ordinary citizen

When the Budget for 2007-2008 was declared and it introduced the VAT for the professionals including doctors and lawyers to give VAT on their income, the ordinary citizen thought that from now on the professional will give only VAT on their professional income at the rate of 4.5%.

The ordinary citizen thought that it will lessen the harassment of the professionals by the Income Tax staffs and officials.

In reality, the ordinary citizen found that the professionals will have to give double tax. On the one hand, they will have to give VAT on his professional income on monthly basis, then again Income Tax on his total income including the professional income on yearly basis.

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Mr. Shayeikh Siraj of Channel ‘I’ has presented some proposals on ‘Budget for Agriculture and Budget for farmers’ first to the Advisers of the CG and then to the Chief Adviser.

The proposals include the more allocation of budget to the Agricultural sector, allocation of more subsidy for the farmers, proper distribution of diesel and fertilizers to the farmers , proper distribution of improved seeds to the farmers, introduction of ID card for the farmers, to organize farmers Association for bargaining, to clarify the Govt stand on hybrid plants and fruits, for increasing vertical production in the Agricultural field etc.

The advisers appreciated the efforts made by Mr. Siraj to organize the farmers, to develop a communiqué with them and to prepare the proposals. The Finance Adviser told that he will try to accommodate the money related proposals in his next budget and the management related proposals will be implemented this financial year.

In his reaction to the proposals, Chief Adviser Dr. Fakhruddin Ali Ahmed told that he was thinking on the ways how to improve the state of the farmers in Banglades, the proposals will help him a lot in that respect.

Bangladesh is an Agricultural Country and most of the people of our country are farmer by profession. Still our Agriculture remains primitive in nature and our farmers remain the poorest of the society. Our farming not improved with age. The successive Govt didin’t pay much heed to it.

Time has come to change our outlook and pay more attention to our Agriculture.

Thanks to Shayeik Siraj for the trouble he is taking to make us and our Government aware about the need of the Agricultural sector in our country.

People will remember him.

The draft budget has been handed over to the President by the Finance Adviser Mr. Azizul Islam.

He placed the Budget to the nation first over TV and Radio and it was published in the internet immediately after the placement in the TV.

For comments and suggestions from the public and the experts time was given for a week which was extended for few more days.

This year Budget specially created healthy debate among the experts as well as in the public.

Probably this is the first time we have seen so much enthusiasm among the public. All section of people ranging from businessmen, economists, technologist, professionals all participated in the discussion. Special discussions were also arranged among the farmers by Mr. Shayekh Siraj of Channel ‘I’ where the Agriculturel Adviser along with other experts were present.

TV channels arranged discussions and Printing Media published many articles on the issue.

The ordinary citizen also took interest in the budget and followed some of the discussions and read few articles.

Though the budget was in general acclaimed by many but specially the economists didn’t remark much positively.

One common remark is that this budget is not an exceptional but mere a conventional budget. As if by a single budget one would create a revolution! We rather accepted the negative remark as its positive strength. We are pleased that it is a conventional and pragmatic budget. At this stage of our country, pragmatism is more necessary than so called revolutionary thinking.

The other criticism is that in budget there is no measure to control the price. This criticisms also came from the Economist and their Society. We are not sure whether it is the official comment of the society or it is the comment of one or two of the office bearer. The latter may be true. But we know that in the budget there are multiple measures including withdrawal of taxes from the essential commodities.

The business community appreciated the budget but at times many of them expressed their concern for lack of protection of the local industries. The Finance advisor tried to give answer to their concern.

The Computer Technology -IT business sector also voiced their concern over the tax imposed on the computer and ita accessories. Finance Advise opined that he will consider the issue though he also said that the taxes will have no adverse effect on the computer market.

The professionals especially doctors felt concern regarding the VAT imposed on them. I have gone through an article written by Dr. Shafiqul Islam in Prothom Alo in this regard. Budget proposed the measure to decrease the harassment by the tax office. Introduction of VAT may increase the collection of taxes from the professionals but hope that it will decrease the humiliation of the professionals regarding tax payment.

On the one hand Govt is to increase the Revenue earnings , on the other hand it also required to address the concern of the people and the community.

In addition to increase of the taxes, Govt should also consider ways to decrease the Revenue Expenditure and dependence on the foreign loans for our ADP. They should also consider the gradual introduction of e-governance in state machinery to improve the efficacy of Governance.

Bdoza

In the Budget Speech, the Finance Adviser declared that CG will make the Income Tax the symbol of social status.

Nice objective. But before that let us see what the state of Income Tax is.

Now, the Income Tax means something imposed from above. The tax payer feel that Government is imposing income tax without extending due services to the tax payers

Income Tax creates worry to many at the end of the financial year because of the harassment awaiting for them in the tax offices.

Income tax creates a sort of agony in many who feels disturbed to pay extra expenses to the tax offices. It is not that people are not willing to pay but the system is such that they are not feeling easy to pay. It is known that people in the Tax offices are more willing to extract money for them than for the state.

It is felt that the rich are paying proportionally less income tax to the state than common people as he can easily satisfy the office. Compare the stress felt by a richer man to pay Tk. 10000 to the office than paying Tk. 5000 by a middle income man. But consider the loss that is incurred by the state. So richer people can able to dodge larger amount of money by paying extra cashes to the office.

Among the taxpayers, it is not taken as credit –who is paying how much. It is rather opposite- who has dodged how much is taken as credit. Our Governments over the years failed to create a society where higher tax payers are acknowledged and acclaimed.

What benefit Government is giving to the tax payers. Except the label of CIP, I personally know nothing.

The ordinary citizen has some suggestions:

1) Government can consider extending the financial benefits on the basis of Income taxes given by the individuals-such as fixing the amount of loan by the banks and financial institutions on the amount of taxes, etc.

2) let the tax of the individuals be disclosed or publicly known. So that culture develop to compare the taxes, not the income or the wealth,

3) Clean the Income Tax office from corruption so that people of the departmen do not consider it as a department to make illegal money ; Few days back I met an Engineer who passed from BUET and now working as a Deputy Commissioner of Taxes; but why on Earth a BUET Engineer would choose the Income Tax as his career department!

4) Simplify the systems of payment of income tax so that a tax payer does not the need the help of a middle man ( income tax layer or office man ) to prepare his return

5) Gradually electronic payment system may be introduced where the tax payer will pay his taxes through internet which is now followed in developed countries

6) Slim down the Income Tax Department , make it more automated. The unnnecessary staffs has created a negative image of the dematment than doing any good

7) In assessment of the professional income, the help of the professional bodies can be taken. It will be more accurate and rational than the so called of the so called Inspectors, who thrive on their twisted assessment; etc.

Bdoza

Budget shows that the total revenue receipt for the coming fiscal year has been estimated at Tk. 57301 crore which is 10.8% of GDP. Of the revenue receipts from NBR source will amount to Tk 43850 crore, 8.3 % of GDP while those from non NBR and non Tax source will be to Tk 13451 crore (2.5%) of GDP.

It is said that bulk of our revenue comes from imports. For a sustainable economy this is not desirable. We have to restore our dependence on import bound revenue collection and augment revenue from domestic sources. We also have to reduce import duties on industrial raw materials and capital machinery and even on the intermediate goods to keep the price of commodities within tolerable limits. Therefore we have to increase the revenue from Income Tax and VAT source.

The discretionary power of the tax official is curtailed and the Tax authorities have been instructed to avoid discretionary tax collection policies.

In this Budget emphasis has been laid on simplification of the tax assessment and payment procedures. Transparency and accountability of the department is to be ensured. .

Government like to create an atmosphere in which the payments is viewed as a symbol of social status.

One of the objectives of the tax measures is to induce the tax payers to pay taxes voluntarily.

Some of the measures proposed:

1) enhance tax exempted income limit for individual tax payers from existing Taka 1 lakh 20 thousand to Taka 1 lakh 50 thousand.

2) introduction of ‘universal self assessment procedures’

3) abolish the tax at source on credit card

4) tax holding benefits to solar energy plants

5) tax rebate facilities to the non-residential Bangladeshi investors

Hope that the measures taken by the Government will ease the tax system and help in collecting more revenue from inside.

Bdoza

It is said that tele-density per 100 persons in our country has increased from 9 in the last fiscal year to 18 now. But the Government has imposed duty on mobile phones. Does it mean that Government does not like the expansion of the mobile phones to the common people? Expansion of the mobile phones not only indicate increase in number of the sets as expansion of connectivity means expansion of business

It is said that the illegal business of Voice Over Internet protocol (VOIP) has been stopped. The policies for bringing VOIP business under legal framework are going to be finalized soon.The accuracy of the decision on VOIP will affect its utility in future.

To augment export earnings, IT products have been identified as one of the priority export products. But the products were not mentioned which were identified and how the export would be augmented not clarified in the Budget.

Internship allowances is being given to create an efficient workforce in IT sector.The volume of the allowance will determine its effect.

The ICT incubation centre was established to enhance the capacity of the ICT companies.

Infrastructure development work has begun to build a hi-tech park. But when work would be finished and initial service will begin was not mentioned. It looks as if it will not start by the endof the the fiscal year. West Bengal already started its 2^nd IT park.

Creation of an IT Equity Entrepreneurship Fund with Taka 100 crore is underway. How the fund would be best utilized was not mentioned.

There is plan to establish a computer lab in one school of each district. But the ordinary citizen recommends taht every school of the country should have atleast one computer in the school

A one year post graduate course on IT has also been in the universities. Advanced skill in IT sector should have to be developed. More programmere and IT experts are to be produced to get the share of the world market. Bangladesh may be developed as an outsource of world market.

An allocation of Taka 1899 crore, which is 2.4% of total budget and 12 percent higher than the revised budget has been proposed for Information, Telecommunication and Information Technology sectors in the next fiscal year. We hope that the allocated money would be utilized properly.

Withdrawal of zero duty on computer and computer accessories was proposed and 5% duty was imposed. This will increase the prize the computers and its accessories and affect the computersation process of the country.

Withdrawal of zero duty exemption on telecommunication equipment and liquid dielectric transformer and to increase duties on this item to bring this at per with VOIP equipment and other transformers was also proposed.

No where in the budget the term e- governance was used and no vision was projected to introduce or enhance e-governance.

Bdoza

Post Script: 17 June 2007

Experts on NTV the other day was telling that it takes months to approve a project in ADP because of file moves so slowly in Bangladesh. Here we need the e-governance. If the secretariat is endowed with technical support, then from the very first day , all executives could follow the movement of the files or a project and take necessary steps.

One of the hindrance is that though in theory no body is against automation, computerisation and e-governance, but very few of our senior executives specially in public sector are conversant with this technologies.

But it is not difficult to overcome. Bangladeshi people are very technological- spread of mobile phone proved that. What is needed is a firm and sincere decision from the Government and a little practical support to the users.

Budget 2007-08 acknowledged that creation of increased employment opportunities is essential for social empowerment. It proposes the extension of existing macro-credit program and ‘allocate Tk 550 crore for employment generation in rural areas outside the ministry-based employment generation programs in the next fiscal year’. But it is not clear to us what employment generation programs are there in the ‘ministries’.

The budget also acknowledge that ‘it is extremely essential to stimulate labour-intensive small and medium enterprises (SME’s) requiring less capital. The growth of this sector is sluggish due to constraints in access to finance’. An endowment allocation of Taka 100 crore has been proposed in the budget for this. Bangladesh Small and Cottage Industries Corporation (BSCIC) have also taken initiatives to create a Trust Fund for providing industrial loans to which the Government will allocate Taka 23 crore. One may ask question whether the amount is adequate to create enough jobs.

It is said that competitive business environment and macroeconomic stability accelerate pro-poor growth. Government is trying to adopt a well coordinated fiscal and monitory policy along with strong support from the external sector and the capital market.

It is acknowledged that the private investment and FDI could not reach the expected level for a variety of reasons. Among these are:

a) underdeveloped financial sector

b) liquidity problems of the bank

c) inadequate and irregular supply of electricity and gas

d) colossal loss of Power Developmental Board(PDP)

e) widespread irregularities and deterioration in law and order situation

f) inefficiency of Chittagong and Mongla Port

The Government is trying to remove these constraints through specific

work-plans. But many of the difficulties will not change much such

power supply despite the best effort.

The business community already raised question about the tax imposed on the raw materials and Capital machineries. They are thinking that these will hamper the growth of the local industry and keep us dependent on foreign goods.

Proper attention also should be given to IT Industry. It is said that infrastructure development work has begun to build a high tech park. IT Equity Entrepreneurship Fund is established with 100crore taka

Most of the employment generation is touched in the budget indirectly and scattered in different pages and may be beyond many people’s comprehension.

Bdoza

Though budget is not all about control of the prices of the commodities in the market, yet it should be addressed adequately in the budget so that the prices of the essentials remain stable and within the reach of the common people.

It has also important political connotation. People will assess the budget by the impact it would have on the market price. The control of the price is also sign of competence of governance. So along with the statistical adjustment, Government needs do take measures which would support the target of the Budget.

In the Budget 2007-08, some measures have been taken to stabilise the price of the essentails in the market as follows:

1) withdrawal of the import duty on a number of commodities including rice, wheat, dal etc.

2) to provide credit facilities on soft term to the new importers

3) efforts to maintain the agricultural product near competitive

4) to establish four whole sale market in four corners of the city

5) monitoring of the prices of the essentils at District and upazilla level by the task forces

6) Stengthen the dal-bhat program by the BDR

7) Increase of the import by both public and private sector

widening the safely net

9) allocation of fund for research in Agricultural sector

There must be reformation of law to discourage the hording of the commodities.

Mere attempts to control prices would not be enough.The inflation is to be checked and the employment opportunity should be created.

Government has eye on all these but the success will be measured by the extent of the implementation.

Bdoza

We appreciate the idea of publication of the National Budget 2007-2008 in the website of Ministry of Finance immediately after the presentation of the budget in the TV and Radio by the Adviser for Finance and Planning Mr. ABM Azizul Islam. Option is also created for the public/experts to give suggestions/recommendations through the web site. It is a step forward towards e-governance.

We also appreciate the idea of the Finance Adviser of consulting with different sections of people including experts, conomists and businessmen of the country to discuss their opinion on the budget and is pleased to hear that many of the suggestions of the groups were incorporated in the budget.

The ordinary citizen is not an expert on the subject. But he has gone through the pages of the Budget displayed in the internet. To him it seems to be a comprehensive budget where the author has tried to accommodate different needs of the county.

He also follows the remarks and comments of different ‘experts’ in TV channels after the budget was placed. He found few objective analysis of the budget. To him, very few experts seem to be conversant with the details of the budget. Many of the comments were out of preconceived idea and more a political statement than a review.

Budget is not only a book of statistics, it is also a projection of philosophy, analysis of the situation and a plan of actions for the future.

Hope that the challenges declared in the preamble including macroeconomic stability and poverty reduction is achieved which will shape the future of Bangladesh..

Bdoza