The Fourth South Asian Network on Economic Modeling (SANEM) Annual Economists' Conference (SAEC)
Economists call upon Governments to increase the tax-GDP ratio to reduce inequality and poverty and achieve the Sustainable Development Goals by 2030 at SANEM 4th Annual Economists’ Conference (SAEC) 2019
The South Asian Network on Economic Modeling (SANEM) is a research organization that aims to promote in-depth research in the areas of international trade, macro economy, poverty, labor market, environment, political economy, and economic modeling. The 4th SANEM Annual Economists’ Conference (SAEC) 2019 "Governing New Challenges: Inclusive Development, Trade, and Finance" took place on 16-17, February 2019, at BRAC Centre Inn, Mohakhali, Dhaka.
SANEM successfully organized the 1st SAEC on “Bangladesh: Way towards a Middle-Income Country” 20, February 2016; the 2nd SAEC 2017 on “Managing Growth for Social Inclusion’’ 18-19, February 2017; and the 3rd SAEC 2018 on “Leave no one behind in South Asia” 17-18, February 2018. The 1st, 2nd, and 3rd conferences were graced with the presence of renowned economists, policy makers and participants from home and abroad where the substantial number of well-thought-out ideas were presented through quality research papers.
The South Asian Network on Economic Modeling (SANEM) organized its 4th Annual Economists’ Conference (SAEC) 2019 on “Governing New Challenges: Inclusive Development, Trade, and Finance”, in Dhaka, Bangladesh on 16-17 February 2019.
Economists called upon the government to increase the tax-GDP ratio to reduce inequality and poverty to achieve the UN Sustainable Development Goals by 2030. The call came at a two-day conference in Dhaka, where economists suggested the introduction of inheritance tax, property tax, and international tax cooperation to curb illicit financial flows and manipulation of the transfer pricing mechanism. They also proposed a tax on international financial transactions to increase tax collection.
In his keynote speech, Dr. Nagesh Kumar, Director of the South and South-West Asia Office of ESCAP, said the rising inequality is a huge challenge in achieving the SDGs. To reduce the infrastructure gap in the region and meet the SDGs about $5 trillion would be needed. Governments must expand the tax base and increase efficiency in tax collection and public expenditure. Substantial resource to finance SDGs could be generated from the international financial transaction tax if illicit financial flows and transfer pricing manipulation which causes developing nations to lose $300 billion annually would be curbed.
Dr. Binayak Sen, the Research Director of the Bangladesh Institute of Development Studies, said that social protection expenditures at the present level of allocations could not reduce income inequality much as it is too meager to instigate any meaningful change. We need to raise the tax-GDP ratio to enhance its effectiveness or else, it lapses into tokenism. For example, this year alone, the government of Bangladesh has allocated Tk 64,177 crore for social safety net schemes, which is 13.81 percent of the total budget while as of June, last year, the tax-GDP ratio was 9.27 percent. Since 2010, growth has been accelerating at a faster rate, but the pace of poverty reduction has slowed down, and inequality is increasing at an even more rapid rate. Likewise, both consumption and income inequalities have been rising. Income inequality is generally higher by 12-16 percentage points than consumption inequality in Bangladesh, according to Sen.
The high economic growth did not yield high political freedom and thus reduced the pressure of redistribution, which works better under democracy. It also could not ensure a significant rise in the tax-GDP ratio. For Bangladesh, the rise has been only two percentage points in a decade, he added. The large social safety net scheme helped address poverty, said Planning Minister MA Mannan. But we are not saying that we have been able to eliminate discrimination. The government is working to reduce poverty and inequality. If we can achieve sustained democracy, it would be possible to achieve inclusive growth and development. If we can make people aware of their strength, we will be able to achieve inclusiveness in economic, social and intellectual spheres.