Dhaka – , Centre for Policy Dialogue (CPD) a leading think-tank has suggested preparing the next budget with a more realistic approach so most of the fiscal policies could be implementable.
The think-tank, also attached priority to four areas to make the fiscal policies effective in propelling economic growth. These include strengthening of the financial structure, increasing public expenditure and tax collection, ensuring transparency in budget making process and continuing reforms in various sectors.It said expediting revenue generation and private sector investment and attaining quality and sustainable growth would be the major challenges to attain the fiscal target in the coming days.
CPD came up with the observations while briefing media about its recommendations for the upcoming national budget for 2016-17 (FY17) at the CIRDAP auditorium in the capital city on Sunday.
Finance Minister Abul Maal Abdul Muhith is expected to place the next budget at the Jatiya Sangsad (JS) on June 3, proposing an outlay of over Taka three lakh crore to take the country’s GDP (gross domestic product) growth to a higher trajectory.
“The budget should be prepared by setting the target based on the revised budget of the elapsing year, which is more realistic,” said CPD Distinguished Fellow Dr Debapriya Bhattacharya.
He said the quality of the budget would improve further should it be made with realistic approach after considering the local and global opportunities as well as the challenges.
The economist suggested that the government should take effective measures to mobilise more revenue resources by increasing the number of taxpayers.
Terming the new VAT (value added tax) law as modern and acceptable, he said strengthening of the implementing agencies is also imperative to ensure proper implementation of the new law.
“Policymakers will need to calibrate and design the fiscal-budgetary measures and incentives by taking cognisance of the current trends concerning the key of macroeconomic correlates”, said CPD Research Fellow Towfiqul Islam Khan as he was presenting the brief of the budget recommendations.
Khan said the government expects economic growth to cross past the 7.0 percent threshold, but level of private investment and revenue resource mobilisation may continue to remain major concern.
He said maintaining the quality and sustainability of the GDP growth should also be another concern as the expected GDP growth would get a considerable boost from the national pay scale revision.
Besides, he said revenue mobilisation in the outgoing 2015-16 fiscal year (FY16) would miss the annual target by a large margin as the country still collects only 43 percent of the potential taxable revenue.
“Revenue mobilisation should come through reforms that widen the tax base, increase tax compliance and lower tax evasion,” he added.
He said widening the income tax base would remain a top priority in the next budget when greater formalisation of small and medium enterprises (SMEs) should be addressed to improve revenue generation.
Khan, however, noted that collection of supplementary duties and import duties was close to the annual growth target while the non-NBR tax registered a strong growth.
He said the fiscal framework appears to be designed with built-in over-projection, and this trend should be revised from the next budget by designing it in a realistic way.
Citing the CPD’s another major budget recommendation, Khan said the Sustainable Development Goals (SDGs) should be mentioned in the next budget along with an implementation framework and estimated resource requirement.
