Tax policy unit to work under Ministry of Finance, not NBR

FE Team | Published: October 03, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Shakhawat Hossain
The country's tax policy unit, which is going to be separated from the National Board of Revenue (NBR), will be housed in the Ministry of Finance (MoF), official source said.
The tax policy unit, directly run by the NBR for more than last three decades, will now be supervised by the MoF.
The decision on bringing in the new tax policy unit under the supervision of the MoF was taken at a recent meeting following instruction by Finance and Planning Adviser Mirza Azizul Islam, sources added.
Sources said a committee under the MoF is now working on setting up working criteria and manpower for the new tax policy unit that is expected to start functioning in the current fiscal.
The next finance bill, which is the most important part of the annual budget, is expected to be adopted by the new tax policy unit, said a senior ministry official.
The MoF officials said such a decision was taken to help boost revenue growth against the backdrop of less-than-projected foreign aid flow in recent years.
Separation of the NBR tax policy unit from the policy execution unit is said to be essential for achieving faster revenue growth and taking forward the comprehensive reform of the revenue board, they said.
Sources, however, said the government has decided to separate the tax policy unit following the suggestion by the International Monetary Fund (IMF).
The IMF has expressed dissatisfaction over delay in settling the issue after the government agreed in principle for separation of tax policy unit from administration last fiscal.
According to the Washington-based multilateral donor agency, critical issues, including separation of tax policy and administration, are needed to be resolved at the earliest for improvement of revenue generation growth.
Achieving future revenue target beyond the modest increase forecast for the FY 08, will not be possible without more comprehensive reforms, it said.
The MoF official admitted that it became imperative for the government to carry out a comprehensive reform of the revenue board as there was no tax revenue growth, in real terms, during the last couple of fiscals.
According to a MoF study last fiscal, the annual tax revenue growth until 2004-05 fiscal was rather satisfactory.
But from the fiscal 2005-06 the situation deteriorated as the NBR achieved 0.2 per cent growth in terms of tax- GDP ratio against the growth rate of 0.4 per cent.
But many NBR officials are opposing the idea saying that the change may not bring about the desired result.
"Many IMF recommendations, which were implemented in the past, could not provide much of the desired results for revenue generation," said a NBR member on condition of anonymity.
The NBR officials suggested implementation of the recommendations of the revenue reform commission (RRC) submitted in late 2003 to carry out comprehensive reform of the NBR.