“During the current fiscal year the government has made many promises and drafted many policies to reach the targets for advancing the economy. It is important for the government now to deliver on these promises. If the FY2009-10 has been the year of preparation, FY2010-11 has to be the year of delivery.” These observations were made by Professor Mustafizur Rahman, Executive Director, CPD at a Press Briefing on CPD Proposals for Upcoming National Budget FY2010-11. In order to contribute to the preparation of national budget CPD prepared a set of recommendations which were presented before the media on 17 April 2010 at its office.
Professor Rahman said that the key challenges for next budget preparation would be to deal with lower investment, growing shortfall in power and gas supply, and rising inflation pressure. To tackle the power crisis he stressed the need to immediately allocate adequate funds to refurbish and reconstruct the existing power plants. CPD also suggested to supply diesel and furnace oil for generators at a subsidised rate, facilitate duty-free import of generators and generator parts, encourage captive power users by providing loans with low rates of interest and to finalise the coal policy on a priority basis.
The CPD anticipated that the budget for FY2010-11 would be around Tk. 132,000 crore with a deficit expecting to be 5 per cent of GDP in the backdrop of the need for increased public expenditure to accelerate growth. Besides mobilising foreign grants, funds from non-banking sources can be mobilised to meet such deficit, it was suggested. CPD said capital gains tax could be a potential source for mobilising additional resources, particularly resources that can be generated from the capital market. But this should be done in a manner that does not add to volatility in the stock market.
For higher income tax collection CPD proposed promotion of online submission of tax returns with tax form having an in-built tax calculator to facilitate self-assessment. It laid stress on enforcement of the use of electronic cash registrars (ECR) to enhance VAT collection for medium and large commercial entities located in divisions and districts towns.
On the ADP implementation Professor Rahman said the government should select top 100 projects, with particular emphasis on power and infrastructure projects, and prepare action plans for ensuring their timely completion. He also suggested floatation of bonds and sector-wise mutual funds to develop infrastructure.
Support to different industrial sectors to help these combat the recession fallout should be continued, CPD opined. To reduce inflationary pressure, CPD favoured continuation of zero-tariff on imports of essential commodities. However, CPD opposed any provision for legalising undisclosed income in the upcoming budget. “This type of facility provided in the budget have never delivered the expected output,” said Professor Rahman.
CPD also suggested to impose green tax on all polluting industries to encourage installation of effluent treatment plants. It proposed introduction of insurance scheme for agriculture and livestock, and incentives for establishment of cold storage for vegetables and fruits. Labour-intensive light engineering, plastic melamine and electronics industrial units should come under the Equity Entrepreneurship Fund (EEF) coverage, CPD recommended.
CPD-IRBD team was also present at the press briefing.
Paper Presented
A Set of Proposals for the National Budget FY2010-11
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