MoF goes all-out to beef up revenue earnings

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Nazmul Ahsan
The government should outsource private agencies and rationalise the current tax exemption list to increase its revenue earnings, recommended a report of the Ministry of Finance (MoF).
The report, styled Macro-Economic Situation: July-December, 2009, will be placed at a meeting to be held on January 27 at Cabinet Division. Prime Minister Sheikh Hasina will preside over the meeting.
The report suggested a seven-point action plan to increase tax- revenue income and an eight-point plan of action to speed up the implementation of Annual Development Programme (ADP).
The report said the government needs to undertake efforts to outsource agencies to expedite its revenue income, expanding the tax net to upazilas and rural growth centres, separating the tax policy wing from tax collecting administration, bringing about changes to Value Added Tax (VAT) and income tax rules, establishing a bench in the High Court to add speed to the settlement of tax-related litigations, downsizing the tax exemption list and expanding the tax net.
Officials at the National Board of Revenue (NBR) said the Income Tax department has long been suffering from dearth of manpower and required logistics causing serious hindrance to tax earnings.
They, however, said the country suffers from lack of professional organisations to be outsourced for the purpose of tax collection.
Coming to rationalising the current regime of tax exemption, they said the task is not that easy as the business lobbies in the country protest in unison if any move to curtail the existing tax exemption facilities is taken by the revenue department.
According to NBR, businesses under about 25 to 27 categories currently enjoy tax exemptions and incentives like tax holiday, tax deduction, concessionary tax rate, accelerated depreciation, deferrals and tax credit, revenue officials said.
Beneficiaries include agro-processing and export-oriented sectors, while reduced tax rate applies to the textile and jute sectors.
On the other hand, another 25 to 30 categories are considered for individuals.
An NBR study in 2006 revealed that tax breaks given to businesses and industries cost the government Tk 350 crore in foregone revenue in the 2004-05 fiscal year.
The amount of revenue exemptions granted to individuals was Tk 125 crore in the 2004-05 fiscal, raising the aggregate amount of lost revenue to Tk 475 crore for the given fiscal year, the study said.
The government earns about Tk 4,000 crore from the corporate sector through both direct and indirect taxes in a single fiscal year, tax officials said.
The Ministry of Finance report on ADP has suggested establishing separate Budget and Planning Implementation wings at each ministry of the government to accelerate the process of yearly ADP implementation.
Furthermore, the report suggested ensuring the development programme of the government under the invigorated Public-Private Partnership (PPP) initiative, rationalising the development projects of large ministries like Education, Communication and Local Government, prioritising the projects and establishing a linkage between the development policies and development activities.
According to the latest MoF report, the government spent only 29 per cent or Tk 305 billion of the ADP budget during first half of the current fiscal, some six percentage points higher than that of the corresponding period last year.
The report said the total tax-revenue income from the NBR portion was Tk 261.40 billion during July-December period of the current fiscal year, which is 16.60 per cent higher than the same period in the previous fiscal year.
Earlier, a report of NBR projected a revenue shortfall of Tk 10 billion in the current 2009-2010 fiscal mainly because of the global financial meltdown and reduction in revenue generation at the import stage.