Benefits of corporate tax cuts needs to be considered carefully

Finance minister said a major goal of this budget would be creating employment. From that aspect we can see quite a few measures taken to encourage businesses. The most important of these measures is the reduction of corporate taxes. Corporate taxes have now been slashed three years in a row. It is hoped that this will encourage employment through industrialisation.

But we need to consider how much the incentives – like tax cuts – really encourage investment and can they really create jobs, because we have not seen the positive impact of our economic growth on the job market. Encouraging business and industrialisation does not always translate to job creation.

Secondly, the incentive given to our migrant workers at a 2.5% rate has been continued this year as well. There are quite a few incentives for migrant workers. We can see some incentives for skill development as well. Simultaneously I found another aspect quite encouraging, various types of assistance and incentives have been declared for start-ups. This will help start-up entrepreneurs from the new generation. Little incentives like these are indeed positive.

But we also need to keep the demands of our population in mind. Many people have recovered from the economic impact of the damage done to our labour market by Covid-19, but not everyone. Many small and medium enterprises (SMEs) have failed to reach the level they were at before Covid-19 pandemic.

We are in a good place regarding demography. To get the benefit of our demography we need to develop our labour force skillfully and use it properly. Whether the initiatives taken to create mass employment are enough to meet our job demands remains to be seen.

The initiatives taken to create jobs through creating a good investment and business climate is indeed commendable. However, I think in order to reach the SDG goal of employment, we need bigger reforms and a bigger roadmap.

This year is a special year. Controlling inflation is a particular challenge. Inflation control is not only through revenue policy. Besides, a monetary policy is also needed. If we combine the two issues, in many cases the government may have to resort to somewhat conservative, narrow policy. This means that the various activities of the government may need to make some cuts in its expansionary programmes to bring inflation under control overall.

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

If job creation is really done by reducing corporate tax, it is only a matter of time if traders pay attention to it. But at the same time something more is needed, such as different types of incentives to encourage people in self-employment. Some rules need to be relaxed in this regard too. Yet there may be some changes in the budget.

Special arrangements may be considered for work such as self-employment. Large and established businessmen can take different initiatives in one and a half cases. The government may not be thinking of financing too much of the government's under-resourced 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 is why we have not 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 skill has also come up in this year's budget. But it is necessary to take this issue more seriously and adopt specific allocations and plans for it. The gap between the labour market and skill-based education needs to be bridged.

In addition, in the current situation, the issue of gender gap should be looked at. If women are in the mainstream labour market then different kinds of barriers have to be removed. For example, child marriage has become more common during the Covid-19 pandemic. That is why day care centres and gender sensitive employment should be looked at.

For young people, helping start-ups is quite commendable. Also, young people could be further encouraged in agro-based initiatives.