Published in The Financial Express on Saturday, 6 December 2014.
Non-tax revenue draws greater govt attention
Economists suggest improvement of service quality
Jasim Uddin Haroon
A move is underway to increase the non-tax revenue (NTR) through a review which involves readjusting and levying fresh charges on various services.
According to government officials and economists the NTR turnovers have remained very low over the years in comparison with the same in many other economies.
But there are differences of opinion between the government officials and the economists about the envisaged raise in government charges without improving the quality of service.
Economists favour reforms in different government sources of NTR to get the boost.
The size of the NTR has hovered around 11 per cent and the government wants to nearly double it to 20 per cent in the coming years.
By a contrast, the size of the NTR in Malaysia is equivalent to 27 per cent of its budget and it is 40 per cent in China.
The finance division that mobilises such type of resources took a move in this connection in October.
They have made some progress since then on it with their planned meetings and workshops with the major ministries and divisions.
So far, the finance division has organised 35 workshops and will do it in the remaining divisions shortly.
A finance division official familiar with the development told the FE Thursday that they were getting adequate feedback from the divisions on the move.
“It is an unprecedented matter to us …. We are getting enormous responses from the divisions,” said the official.
He said this is a very potential area of revenue mobilisation to fund the budget.
“Actually we want dynamic incremental growth strategy for the NTR,” he said, wishing anonymity.
It is known that the government wants to raise the NTR by reviewing the existing charges on different government services.
Finance division sources said many rates of government charges had remained unchanged for long — even for 20 years.
They argued that periodical revision of government service charges at right intervals does not affect the people.
On the contrary, any major increase in railway fares after 20 years have hit many people as the jump was very high at one go.
It is believed, they said, this can be raised by review of existing rates of different services. This section of officials said stopping free-distribution of different types of forms will also boost the NTR receipts significantly.
Dr Zahid Hussain, lead economist at the Dhaka office of the World Bank, said simply raising charges to boost the NTR seemed to be unrealistic.
“There are limited spaces for enhancing many government charges as those had already been revised on a number of times,” he argued.
He however said improvement of government services is the key to mobilising resources from them.
Dr Hussain said the government should take decisions on the losing state-owned enterprises for a sustained growth in NTR.
“There is a trade-off between the selling out of the state-owned enterprises (SoEs) or making them profitable,” he said.
He said sale of SoEs will derive adequate capital revenue and making them profitable will help earn dividends or profits for the government exchequer.
Dr Khandker Golam Moazzem, additional director at the Centre for Policy Dialogue (CPD), said there is need for reforms in different sources of NTR.
He suggests the government should run only the profitable SoEs.
“There is immediate need for selling off losing ones,” said the policy- researcher.
He however noted that government is in need of fresh investment in some areas to raise the quality of services.
Dr Moazzem suggests the government might invite private parties for giving services for quality improvements. But public investment in infrastructures, like in development of new rail lines, is a prerequisite for attracting private entrepreneurs.
However, currently, government mobilises the biggest amount of NTR from administrative fees and charges.
The government earned Tk 264.93 billion in 2013-14 and now eyes Tk 276.62 billion — more than 4.0 per cent up.
The dividends and profits, interests, fines, penalties, receipts for services rendered, rents, leases, tolls, levies and defence receipts are the main sources of non-tax revenue.