The Finance Bill 2022, in essence the approved budget for the next fiscal, was quietly passed in Parliament before it was prorogued on Wednesday, June 29. As these words get written, that new fiscal -2022-23 - is in fact already upon us. The final passage to get the bill through parliament made for some interesting viewing, particularly in all the wrangling over the specificities of the scheme proposed by the Finance Ministry during the presentation of the budget.
Obviously almost all the talk around the proposed budget of A.H.M. Mustafa Kamal over the past three weeks had at least hinted at condemnation of his quite elaborate scheme to allow the repatriation of money that had been laundered, or illegally stashed abroad. But what has he managed to get through in the end?
A Bangladeshi passport-holder can repatriate any cash, bank deposits, banknotes, bank accounts, convertible securities and financial instruments by paying a 7.0 percent tax. That means the government backtracks on the original proposal articulated by Kamal, to allow repatriation of immovable assets by paying tax at 10-15 percent. The existing special provision of whitening black money, included as part of the budget for the current outgoing fiscal, has been scrapped for 2022-23.
In Finance Bill 2022, the limit for cash transactions on a single account has been raised to Tk 3.6 million, from the Tk 1.2 million that was proposed by the finance minister in his budget speech. There were a couple of other proposals from the document he placed for his colleagues' perusal in parliament on June 9, that didn't make it to the final cut. All in all, it's really not much to write home about - unimaginative, uninspiring. Any overarching message is really not in evidence, except perhaps "More of the same, please." Or if we allowed the original scheme Kamal came up with for whitening black money, that could have counted as something original from the finance minister. But the entire section was heavily amended by MPs.
There is also no reason to overstate the importance of the government's budget for any given fiscal obviously. It has remained comfortably less than a fifth of the economy. Having nudged up slightly for a period till 2018, it has been trending downwards again in the last three, and for 2021/22 it has been estimated at 17.5 percent. Long-time proponents of raising the allocations for education and health in particular, and other sectors with a social element in general, seize upon this gap with similar countries in the region, as the space to grow in. Nepal's budget was 21.7 percent of its GDP in 2019, while Bhutan had a budget equivalent to 20.4 percent of its GDP in 2018.
It becomes clear from perusing the relevant section that the social safety net, the set of programs a government nurtures as a protective net for those who may lack access to resources or opportunities. During the Covid-19 crisis, the government's outlays in the form allowances for the elderly (Tk 500 per month), or the disabled (now Tk 750-850) were exposed as hopelessly inadequate, and probably wasted if not raised to a more sensible amount. As a proportion of the budget, the allocation for the social welfare sector has actually gone down through this budget.
Coupled with the cuts in the corporate tax rates, it is easy to assume the finance minister has protected the interests of businesses. But they have their own complaints about the lack of initiative to address some alarming headline figures in the economy, through the budget.
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