The benefits of corporate tax cuts should be carefully considered

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June 09, 2022, 10:45 p.m.

Last modification: June 09, 2022, 10:47 p.m.

Doctor Sayema ​​Haque Bidisha. Illustration: TBS

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Doctor Sayema ​​Haque Bidisha. Illustration: TBS

The Minister of Finance has said that one of the main objectives of this budget will be job creation. From this aspect, we can see a number of measures taken to encourage business. The most important of these measures is the reduction of corporate tax. Corporate taxes have now been reduced for three years in a row. It is hoped that this will encourage employment through industrialization.

But we have to consider to what extent incentives – like tax cuts – actually encourage investment and can they actually create jobs, because we haven’t seen the positive impact of our economic growth on the labor market. work. Encouraging enterprise and industrialization does not always translate into job creation.

Secondly, the incentive granted to our migrant workers at a rate of 2.5% was continued this year as well. There are many incentives for migrant workers. We can also see incentives for skill development. At the same time, I found another aspect quite encouraging, various types of aids and incentives have been declared for start-ups. This will help new generation start-up entrepreneurs. Small incentives like these are positive indeed.

But we must also bear in mind the demands of our population. Many people have recovered from the economic impact of the damage done to our labor market by Covid-19, but not everyone. Many small and medium-sized enterprises (SMEs) have not reached the level they had before the Covid-19 pandemic.

We are well placed in terms of demographics. To take advantage of our demographics, we must skillfully develop our workforce and use it well. It remains to be seen whether the initiatives taken to create mass jobs are sufficient to meet our job demands.

The initiatives taken to create jobs by creating a good investment and business climate are indeed commendable. However, I believe that to achieve the employment target of the SDGs, we need bigger reforms and a broader roadmap.

This year is a special year. Controlling inflation is a particular challenge. Controlling inflation is not just about revenue policy. In addition, a monetary policy is also necessary. If we combine the two issues, in many cases the government may have to resort to a rather conservative and narrow policy. This means that the various activities of the government may have to make cuts in its expansionary programs to control inflation overall.

As such, I think this year is a challenge because the global situation is uncertain. At the same time, how our internal market will adjust is an important question. We see in the budget the initiative taken by the government to create a large number of jobs at this stage. A big initiative. It may take some time before the results come.

If job creation really happens through corporate tax cuts, it’s only a matter of time if traders pay attention. But at the same time, something more is needed, like different kinds of incentives to encourage people to become independent. Some rules also need to be relaxed in this regard. However, there may be changes in the budget.

Special arrangements may be considered for work such as self-employment. Large established entrepreneurs can take different initiatives in one and a half cases. The government may not be thinking of funding too many under-resourced government projects. The reason is that it can often increase inflation.

Since there is a two-way challenge here, a middle ground has been taken. That’s why we haven’t seen much expansion of government initiatives. But if we want to encourage overall employment, we need to focus on self-employment.

Along with this, the issue of skills was also raised in this year’s budget. But there is a need to take this issue more seriously and adopt specific allowances and plans for it. The gap between the labor market and skills-based education must be closed.

Also, in the current situation, the issue of the gender gap should be considered. If women are present in the traditional labor market, different types of obstacles must be removed. For example, child marriage has become more common during the Covid-19 pandemic. This is why childcare centers and gender-sensitive employment should be looked at.

For young people, helping start-ups is quite commendable. In addition, young people could be further encouraged in agro-industrial initiatives.

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