The government should attach highest priority to health security in the next budget for the fiscal 2021-2022 alongside focusing on incentives for the economic recovery, economists and businesses have said at a webinar.
Stating that many reforms are needed in the health sector, they suggested inoculating at least 50% of the country's population as soon as possible.
Apart from enhancing budgetary allocation in the health sector, there should be a public-private partnership for improving the healthcare system, they said at the virtual discussion titled "Macroeconomy: Expectations from National Budget 2021-22" on Tuesday.
The Institute of Chartered Accountants of Bangladesh in association with the Economic Reporters' Forum organised the webinar.
Top economists and businessmen in the country have been vocal about health security at a time when the country's Covid-19 vaccination drive hit a snag amid uncertainty over availing the next shipment of vaccine doses anytime soon. The government has also suspended the dosing of the first shot with the Oxford-AstraZeneca vaccine supply from India remaining stopped. As a result, the economy, which was running on the recovery track, again hit a stumbling block.
On the other hand, the health sector's proposed allocation in the next fiscal year's Annual Development Programme (ADP) has not increased as expected. According to the new proposal, the allocation is only 7.71% of the total ADP although there has already been a lot of criticism in all quarters about the ongoing fiscal year's health sector's ADP allocation of only 5.5% at this pandemic time.
Considering all these, businesses and economists at the discussion suggested enhancing allocation in the health sector and involving the private sector to mitigate crises in the healthcare system.
Dr Ahsan H Mansur, executive director of Policy Research Institute, at the event said providing people with job opportunities by keeping them free from health risks is more important than giving incentives.
The economist proposed allocating Tk15,000 crore in the next budget for bringing people under vaccination and the fund should be made available from day one.
Dr Masrur Reaz, chairman of the Policy Exchange of Bangladesh, said if at least 50% of people cannot be vaccinated in the next one year, revival initiatives and recovery will be very tough.
Calling upon all to work together for ensuring health security, Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industries, said if any private organisation wants to work on healthcare, they should be given special incentives.
Rasheda K Chowdhury, former adviser to the caretaker government, said the next year's budget should be a pandemic-focused one while the education sector should be brought under the stimulus package as losses to the sector are huge and it is invisible.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, urged the government to provide policy support to the affected industries till the crisis ends so they can make a turnaround.
Focus on food, employment and small ventures
Besides health, CPD Distinguished Fellow Prof Mustafizur Rahman thinks food security, employment and small industries should get priority in the next budget.
In the face of pandemic-led poverty hike and fragile health system, he said special allocations should be made and projects should be taken to generate employment to keep the small and rural economy strong.
Besides continuing allowances to the elderly, differently-abled and widows, Sanem's Executive Director Prof Selim Raihan proposed special allocations for the new poor under the social safety net programmes.
He said the problem needs to be identified first for recovery and reform. The previous stimulus packages could not reach out to the small industries.
Ahsan H Mansur proposed distributing at least Tk1,000 crore for the food security of the new poor through the deputy commissioners. "Only Tk50 crore was given to the deputy commissioners during the first wave, and many marginalized people did not get government help. The poor should be provided with special allocations," he noted.
Dr Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies (BIDS), commented that in addition to increasing food security, small enterprises need to be given special importance in the next budget.
The management of macroeconomics is very important during the pandemic. The upcoming budget should aim at retaining employment, she added.
Shake off GDP obsession
Prof Dr Mustafizur Rahman commented the government is suffering from GDP growth obsession instead of addressing major economic issues.
He said though the GDP and revenue ratio was supposed to be 14%, the country is stuck at 8.5%. The investment and GDP ratio was supposed to be at 34, but it is at 28.
"In other words, our denominator [the number of equal parts in a whole] is growing but the numerator [how many parts are being considered] remains stuck."
"We had been witnessing a slowdown in exports, imports and revenue even before the pandemic. Now is the time to address the issues," he added.
Abul Kasem Khan, chairperson of the Business Initiative Leading Development (BUILD) and former Dhaka Chamber president, said the next budget should focus on increasing consumer spending and generating new jobs, instead of being too much obsessed about GDP growth.
"People's income has declined due to Covid-19. Now the reduced consumption will affect production which will cause unemployment leading the economy to stagnate. Stop looking at GDP rates; give money to people so that consumer spending rises," he added.
Don't raise tax, rather widen the tax net
Businessmen and economists called for a reduction in corporate taxes and not to impose new taxes in the next budget. They also advocated for the abolition of minimum tax obligations.
Dhaka Chamber President Rizwan Rahman told the programme that Bangladesh has the highest corporate tax compared to other countries. He proposed slashing the corporate tax by 2% a year to 25% from the existing 32.5%.
The Dhaka Chamber president urged the revenue board to widen the tax net instead of increasing the taxes.
Rupali Chowdhury, president of the Foreign Investors' Chamber of Commerce and Industry, demanded exemption of 0.5% tax on annual turnover even if the company incurs losses.
Speaking on the occasion, Bangladesh Association of Software and Information Services (Basis) President Syed Almas Kabir said revenue collection will increase if VAT evasion can be prevented.
"That is why they need the use of technology. If enterprises with more than Tk5 crore annual turnovers can be brought under a software registry, the revenue collection will certainly increase," he claimed.
Aftabul Islam, former president of the American Chamber of Commerce in Bangladesh, demanded reducing tax on dividends and slashing corporate tax gradually.
Stop allowing black money whitening
The discussion came down heavily on the scope for whitening undisclosed money.
Barrister Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry, said she has been paying 30-32% income tax for 30 years. But people with black money now can whiten their undisclosed assets by paying only 10% tax.
"Why would I pay more even after earning honestly," she asked the government.
Dhaka Chamber President Rizwan Rahman referred to the opportunity to whiten black money as undisclosed assets as a kind of fraud. "If such facilities continue, we, the legitimate taxpayers, will stop paying taxes," he said.
Prof Mustafizur Rahman also thinks the government should stop allowing black money whitening in the next budget.
He said the provision contradicts the revenue collection policy framework. Even though the government earned a good amount owing to the scope this year, we think it should be stopped.
Institute of Chartered Accountants of Bangladesh (ICAB) President Mahmudul Hasan Khusru chaired the webinar which was also joined by the Prime Minister's Economic Advisor Dr Mashiur Rahman, ERF President Sharmin Rinvy, General Secretary SM Rashidul Islam, ICAB Vice-President Maria Howlader, and daily Prothom Alo's Shawkat Hossain Masum.