Bangladesh: The Onus Is On The Poor
By Protik Bardhan
15 June, 2012
Countercurrents.org
A study in the context of the proposed budget 2012-13
Each year, budget opens a new vista of expenses on the part of the poor, lower, lower middle and middle class people of the society. The article 15 of our constitution, however, professes that the state shall ensure the provisions of basic necessities of life, including food, clothing, shelter, education and medical care of its citizens. Yet, the reality is far away from such scenario. Here, the poor reel in pain for want of lack of the basic necessities of life despite working hard for 12-14 hours a day; while the rich gain weight through consumption of all the creams. The poor are further impoverished.
Indirect Tax
Like the previous years, the proposed budget for the fiscal year 2012-13 largely banks on the revenue income from the indirect taxes. The NBR taxes accounts for 58.5% of the total income of the government. Of it, 31.5% comes from income taxes, that is, direct taxes; while 68.5% comes from indirect taxes. Interestingly enough, a recent news says that only 200 people has income of around two crore taka a year. So, a big gap can be perceived in the tax return submitted by people. The rich are reluctant to pay taxes; they have all the mechanisms to evade taxes. On the other hand, the middle class/lower middle class and the poor people contribute the lion’s share to the tax revenue income of the government.
Yet, the people do not have the access to the basic necessities of life, let alone the amenities enjoyed by the rich. The state and the governments do not provide any social safety net for these people. However, the proposed budget allocated an amount in this regard. As our experience says, no implementation of such measures will be made in the days to come. The large numbers of people are plundered as a result of the excessive prices of essentials determined by the traders. Plus, the new target of VAT collection will further impoverish these people. It is a twofold robbery of the poor presided over none by anyone else, the state.
In NBR tax revenue, VAT accounts for 36% of it. It is a good sign that the government is relying more on internal resources as foreign loan and grants jointly comprise only 9.7% of total income (proposed) of the government. The financial crises of the west and rampant corruption in the country are the two reasons behind such decrease in foreign sources of income.
Yet, the rich remain relatively untouched by it as income tax or direct tax account for 31.5% of the total income of the government. Both the individual tax payer and large tax payers’ unit evade taxes in different ways. The NBR mechanism and corruption of the officers concerned are two of the reasons. Indeed, the NBR officials are all wealthy persons despite receiving the meager government salaries like other cadres of the government. The rich have the power to pressurize the government. Especially, the RMG owners are always on a spree of reducing their taxes. The proposed budget raised their advanced income taxes. Despite making huge money, they have already urged the government to keep the AIT at the previous level citing the reasons of stability of the industry. This is not fair, people making more money should be taxed more- it should the state policy.
The new target of VAT will be met from the price hike of some essentials used mostly by the common people. The kitchen market has already been heated up. The prices of egg, imported fruits, tea, cigarettes have gone up on the following day of budget declaration. However, the new prices are supposed to be effective after the budget is passed. It has become a practice in the country that the prices of goods go up immediately after the budget declaration. There is no one to monitor it, let alone control.
Especially, the hike in the price of eggs will make the poor suffer heavily. Eggs are the main source of protein to them. Also, easy cooking process has made egg a highly popular/used food among the poor and lower income group of people. Students living in the dormitories are also heavily dependent on eggs. So, the excess VAT on eggs will draw a huge amount of money from the pockets of the above mentioned group of people.
Sector wise picture of discrimination:
Reduction in agriculture subsidy will heavily affect the farmers. It was TK. 6500 crore in last year, while TK. 6000 crore has been proposed this year. There is no denying the fact our economy is an agriculture based one. A huge number of people are involved in it, either directly or indirectly. The reduced amount of subsidy will incur them additional production cost. It would hamper their investment ability. Also, they will not get the adequate prices of the products as we have seen over the years. The middlemen in agri marketing eat up the cream; the remains are left for the poor farmers. This is to be noted that US and other developed countries earmark huge amount of money as subsidy for agricultural sector. So, the farmers are likely to get nothing from this budget.
Education budget has also been decreased compared to last year. It was 11.8 % last year, while 11% has been proposed in 2012-13.
Even, the education minister has expressed his concern over this reduction as a report of New Age says. He said, “We need more budgetary allocation to continue progress in education sector.” However, educationalists have demanded 14% of budgetary allocation in education sector for smooth development of education. UNESCO declaration states that allocation for education should be at least 20% of the total budget and 6% of the gross domestic product. So, cost of education will increase and the scope of education for the poor and lower middle class people will shrink.
The discrimination becomes as clear as day light in the health sector. Government hospitals barely have treatment facilities. Some treatment is available in the medical college hospitals and district headquarters, while the conditions of the rural level hospitals are miserable. Accommodation of government level hospitals is also numbered. So, rural people have to resort to the city clinic for their treatment. Again, the middle class cannot even think of going to the government hospitals. In such a scenario, government has cut the allocation in health sector. Last year, it was 5.1%; while it stands at
4.7% this year. The prevailing high inflation rate has already made health services costly for the poor. And the latest move by the government will put the last nail in the coffin.
Finance minister himself said; around 42-82% money in our economy remain untaxed. The amount can easily be perceived. Government has allowed whitening of this huge amount of money by way of investment in a bid to stop siphoning of this huge amount. This is a good move provided that the goal is met. Further, an added percentage of tax has to be put on this investment; otherwise the government should confiscate this undisclosed money and use it for people’s welfare measures.
Democracy has to be redefined in the present day scenario vis-a-vis what Abraham Lincoln defined: democracy is a government of the people, by the people and for the people. In capitalism, government does not act for people; rather it plunders the people. That is why; more percentage has been allocated for miscellaneous sector compared to health sector.
Indeed, people’s back are at the walls, they will certainly revolt. Democracy will be redefined then.
The writer is an activist in Bangladesh, he can be reached at [email protected].
Due to a recent spate of abusive, racist and xenophobic comments we are forced to revise our comment policy and has put all comments on moderation que.
