Put brake on tax dodging, don’t levy new ones: CPD urges govt

The Centre for Policy Dialogue, a non-governmental research organisation, has recommended an expansionary budget to curb tax evasion and money laundering instead of levying new taxes.

The policy planning of the government should focus on prevention of inequality and equitable distribution, not merely on the growth of Gross Domestic Product (GDP), Centre for Policy Dialogue (CPD) also suggested.

These recommendations were put forward by the think tank at a virtual press briefing on Monday on State of the Bangladesh Economy in FY2020-21.

As part of its programme, the CPD carries out an interim review of the national economy at the fag end of every fiscal year.

Towfiqul Islam Khan, Senior Research Fellow of CPD, presented the keynote paper at the media briefing on behalf of the IRBD research team.

According to the keynote paper, the addressing of embedded institutional weaknesses and resilient recovery of the economy has become entwined. Inherent weaknesses in the banking sector are undermining the government’s efforts to expedite economic recovery through bank-dependent stimulus packages.

Towfiqul said, “FY2021 targets for export growth remain way below targets. Even during the pandemic, the much-needed expansionary fiscal-budgetary policies could not be implemented because of endemic weaknesses of implementing agencies and line ministries. No tangible change could be brought in terms of the capacity to earn and spend."

For reform the government should form the banking commission, agriculture price commission, competition commission to create the foundations of good governance that will help the economy to recover from the economic fallout of the pandemic and build back better, he said.

The CPD presentation also noted that although revenue mobilisation started to pick up, the pace of public expenditure in FY21 failed to do so.

Instead of designing a Covid-specific budget, the government largely opted for a business-as-usual one in 2020.

Assumption was that managing the fallout from Covid-19 will be easy, and the economy will bounce back within a short period in FY21. Recovery from the entire fallout will take much longer than expected - susceptible to changes in the nature of Covid-19 and the availability and effectiveness of vaccines. The government needs to formulate a medium-term recovery plan, the keynote paper said.

It suggested, the national budget for FY22 should focus more on equity, redistributive justice, protecting jobs and saving lives, and less on economic growth.