Dr. SM Jahangir Alam :
One of the two methods of raising revenue is adaptive tax policy and non-tax revenue policy. Another is to increase the efficiency of administration in revenue collection and reduce corruption.
IMF also has a guideline in this regard. This includes achieving at least as much revenue as possible within the current framework.
One of the biggest issues in current revenue management is tax exemption and tax rebate. According to NBR’s calculations, the amount is Tk 2.5 lakh crore.
However, they did not disclose the final account. Although the tax exemption is given for a specific period and purpose, it continues for years.
From the previous finance minister to the current NBR chairman, they have spoken about it. At least need to rationalize without stopping tax benefits. To what extent it will be done, it will be seen in the next budget.
On the other hand, a senior official of NBR told the media without disclosing his name regarding the Cash and Debt Management Committee (CDMC) decision that the government’s dependence on the market system for internal financing is increasing after the reduction of government funding from savings bonds.
The major source of market-based financing is the banking sector. Demand for financing from commercial banks has increased. On the other hand, interest rates have already increased in the market. Achieving domestic financing targets may be challenging if current conditions persist.
For this reason, everyone agreed that increasing revenue collection is the only solution to keep the budget deficit at an acceptable level and to continue or increase the pace of development of the government. It is the responsibility of NBR to implement it.
However, NBR is not at ease about collecting or collecting revenue. In the current fiscal year, NBR’s revenue collection target has been set at Tk 430,000 crore. In this, NBR faced a huge deficit for the first six months (July-December) of the financial year.
23 thousand 227 crore 19 lakhs is lagging behind the target. In December, the deficit was 6,782,210,000 taka. However, the revenue collection at the end of six months has increased by 13.89 percent compared to the previous financial year.
Although nearly 88 percent of the target was achieved, NBR could not avoid a major deficit. At this time, against the target of 1 lakh 88 thousand 756 crore taka, the government has collected 1 lakh 65 thousand 629 crore taka.
According to the data obtained from the statistics department of NBR, the amount of revenue deficit at import and export level is 8 thousand 563 crore 47 lakh taka. At the same time, there has been a shortfall in Value Added Tax (Musak) or VAT of Tk 6,700,740,000. The amount of deficit in the income tax sector is 8 thousand 592 crore 98 lakh taka.
In this situation, the big question is how much the NBR can contribute to reduce the budget deficit. Despite the increase in revenue collection, the actual amount of collection is not increasing. The tax-GDP ratio is still below eight.
If the tax officials If it is possible to reduce corruption by bringing it under accountability, then it is possible to take the tax ratio close to 10 in this tax structure. In that case there will be no need for fresh taxation.
There are two ways to reduce the budget deficit – reducing expenditure or increasing revenue. In this situation of a dollar crisis in the foreign exchange market, if the budget deficit increases, the crisis will intensify.
In such a situation there is no option to increase revenue. However, there is hope that the first quarter of the fiscal year has a surplus instead of a budget deficit.
According to the calculations of Bangladesh Bank, 6 thousand 425 crore has been paid without taking loans from the banking sector to meet the deficit budget. 6 thousand 615 crore of foreign debt has been repaid. However, it is ‘impossible’ to avoid a budget deficit at the end of the fiscal year.
In the current fiscal year 2023-24, the overall deficit in the budget of seven lakh 61 thousand 785 crore has been estimated at two lakh 61 thousand 785 crore, which is 5.2 percent of the total GDP.
Of this, five lakh crore rupees should come as revenue. There is a target of collecting 1 lakh 2 thousand 490 crore from foreign sources and 1 lakh 55 thousand 395 crore from domestic sources to meet the deficit of 2 lakh 61 thousand 785 crore of total budget.
It must be remembered that the objectives of fiscal policy are multifaceted. Given the numerous demands and commitments faced by the government, the objectives of fiscal policy are also diverse.
However, according to Professor Musgrave, those objectives can be divided into three broad categories. (1) Economic Desirable distribution of resources among different sectors and economic development. (2) Elimination of economic inequality. (3) Achieving economic stability, desirable distribution of resources among different sectors of the economy and economic development.
The main objective of fiscal policy is to achieve economic development. Apart from this, achieving the desirable state of full employment or near full employment through unemployment is also an important goal of fiscal policy.
Achieving that goal requires appropriate implementation of government expenditure, taxation and transfer expenditure policies as revenue instruments.
Author: Bir Muktijoddha, Former Tax Commissioner and Director-Bangladesh Satellite Co. Ltd.
