The middle class needs government support
Mahmudur Rahman |
May 29, 2021 9:51:16 PM
Taxing the rich to “serve” the poor is akin to Robin Hood’s principle in his war against the Sheriff of Nottingham from his base in Sherwood Forest. This is in practice by governments around the world, mostly relieved by other tax breaks and Sops. Such principles need serious reform due to the creation and growth of a middle class. They are and will continue to be the main contributors to indirect taxation. This in turn will increase the pockets of the richest. Despite all the misery and economic downturn of the pandemic, the world’s billionaires and those of Bangladesh’s billionaires have grown richer. Ten thousand more people have Tk 10 million in bank deposits. One can imagine how much their wealth is because only the numbers of bank accounts have been released. Just 9,934 people legalized Tk120 billion of untaxed and undisclosed income and assets on payment of a minimal 10 percent tax under the “no questions asked” provision in the first three quarters of the year. the outgoing fiscal year. It’s safe to assume that he probably didn’t cover millionaires all over the country.
The slap in the face of extremely low but conscious taxpayers may have been lost on policymakers. That’s on the other hand after last year’s budget decision to actually raise rates for them relative to those of the wealthiest. Things are unlikely to improve given an even larger budget planned for the next fiscal year, the source of which is not yet known. Problems such as the massive revenue collection deficit compared to targets, continued draining of state resources through stimulus packages, aid and cash injections for those most affected do not appear to be. have been taken into account. Of all the indicators, big budget infrastructure projects are sure to be fundable. Neither does the bridge and road transport sector.
Of the top three contributors to GDP, agriculture comes third, but the proposed allocation for subsidies, price support and inputs is slated for a meager 9,000 crore. This is well below the economists’ vision of Tk 200 billion. There are no visible plans for integrated agriculture from cultivated fields to market. The last direct purchase of food grains fell well below target. Pricing was the factor exacerbated by the archaic “bring us the rice” model. This allows intermediaries to flourish. After repeated shocks in the supply chain during the pandemic, prices have skyrocketed at outlets. No action has been taken against undue hoarding by millers and wholesalers. It was the same for the onion. Once tariffs were reduced, prices magically fell and imported onion, garlic and ginger rotted in containers at ports. Investments in shared harvesting machines have not been prioritized, and hapless farmers mourn sadly about the increased cost of time-consuming labor to carry out shelling.
The invisible but factual reduction in consumption was not taken into account either. The end result was an alarming drop in government food grain stocks. Little has been said about the poultry and fishing industry, which has demanded more for low interest loans and stimulus packages to overcome the demand deficit and the underrated slaughter tragedy. They too will have to repay the interest. No organization, political or otherwise, has yet called for a rescheduling of their loans, albeit small. Instead, the media is focusing on large corporations seeking rescheduling, duty exemptions, and corporate tax cuts. Companies that have not kept reserves for a rainy day, have no idea of consumption patterns or workforce retention should not be considered. Especially since they do not provide any solution to income generation in these times. They think for themselves and do not reduce their personal economic growth. Blaming the pandemic for not investing is a bad excuse. When the banks’ interest rates were cut, they didn’t borrow. If Apex CEO Nasim Manzur talks about wanting to hold his ear and going out of business, he represents a group that pays taxes, repays loans but is hit hard by declining demand for products, locally and abroad. Small businesses couldn’t find their way into the documentation quagmire. Banks rely on liquidity in the hope that the government will borrow. The chances are slim. If previously a big interest bill worried the government, it now faces a massive collection of bonds by the same middle class which must spend thanks to its savings. Lower interest on deposits reduces cash inflows from banks.
The middle class needs support. Teachers, employed people, small businesses, rent-dependent citizens and retirees need to get stimulus and tax breaks to boost spending and get on with their lives. Remittances are not solely responsible for the record amounts repatriated. There are a growing number of those who have siphoned off money, pouring in because the scope of investments overseas is shrinking. Many have returned home after losing their jobs. They are in addition to the 25 million lower middle classes who have fallen back into poverty. This brings the poverty line group to almost 40 million. The World Bank’s $ 600 million loan to help this group can lead to massive change provided it is used correctly and unnecessary expense is avoided. That and close monitoring of corruption is the way to go. Throwing money on economic problems is not sustainable. A clearly defined return on investment, including integrated supply chains that encourage consumption, is one answer. Stealing from the poor through tax extortion, bribery and all these schemes to help the rich cannot be a goal of the state. Strict austerity, perhaps a selective wage freeze offset by performance bonuses, and a quarterly spending review are hard choices to make. Ask the middle class, day laborers and farmers. Their contributions will be invaluable.