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A Budget for the Cronies

June 8, 2014

Awami League Govt has presented its first budget of its third term. Its size and targets have ncurred criticism from economists, various professionals and professional bodies.

But what surprised us is government’s reaction to critics of the budget of FY 2014-2015. Despite being in power, it sometimes forgets to tone down its voice even for a moment.I often have a feeling that we are being ruled by an “Opposition Party”.

Next Budget will tremendously benefit Awami cronies. In the proposed budget corporate tax of non-listed companies has been recommended to reduce from 37.5% to 35%. A good number of Awami cronies fall into these categories. Tax reduction on the imports of high-end cars has also been proposed.I fear a huge sum of money will be laundered abroad in importing these cars.

The sheer size of the ADP has also attracted opprobrium from concerned professionals and think-tanks.

Despite the overconfidence of the present planning minister, Planning Commission, which was determined to complete 305 projects, has yet to complete 117 projects, as pointed out by country’s leading think-tank CPD. Whether or not the allocated money is spent is the sole criterion for evaluating the projects, as noted by CPD. But such projects hardly solve people’s problem.

Take for example public spending on Dhaka’s water logging. A leading Bengali daily published a report that says govt. has spent TK 3.03 billion to address capital city’s water logging problem; the condition, however, remains much or less same.

Another key feature of next fiscal year’s budget is to bring a large number of landlords, who have so far remained out of the tax net, into the tax net. Govt. is planning to bring amendments to Income Tax Law, which will require that house rent over Tk 25000 be paid through banks. Clearly, brunt of this change will be borne by the tenants through various hassles. What’s about the houses on Begum para in Canada, or ‘the second homes’ in Malaysia? FM should also think how he can bring those landlords (!) into the tax net.

To finance this huge budget, it will borrow more from banks. This, in turn, will make private investment scenario worse. In addition, it will cut down subsidies on fuel and energy, as per conditions laid down by ECF of IMF, which will further increase the cost of living.

So, ordinary people will continue to pay for government’s macroeconomic mismanagement. While my pocket empties, party cronies get richer and generate more black money. A large part of which will ultimately end up in foreign economies no matter what govt. does to bring those money into mainstream economy.

Dreaming big and setting high targets are indeed good, but when those are done by competent and popular regime. A proven incompetent regime and a terrible manager of economy have no right to dream big and fill up its cronies’ coffer at the cost of people’s money.

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