Business tax can make UPs self-reliant: study
Saturday, 23 August 2008
Tax on business entities at local levels has been identified as potential income sources for the survival of union parishads (UPs), the oldest and strongest tier of the local government bodies in the country, reports BSS.
An action research of RTI, a USAID supported organisation, said the 'business tax' could help UPs to generate an amount that is sufficient to meet their annual expenses for office and staff, which now comes from the central government.
The research conducted in five UPs in Natore district between 2006-08 showed that annual income from commercial enterprises in Tebaria, Dighapatia, Baraharishpur, Walia and Majgaon shot up by 20 to 176 per cent after piloting started in the areas two years ago.
"Business tax is a major potential sector for UPs to raise income from own sources to be self-reliant. But it is often ignored as the elected representatives do lack proper planning and expertise and fear of losing popularity," Saiful Islam, programme coordinator of RTI, told the news agency Friday.
Saiful, however, said the assessment and collection of the business tax, which is an addition to the income tax and licence fees, was a big challenge for the UPs, who are mainly run by grants from the government with a meagre income from their own.
"This way the UPs can move forward towards achieving self-reliance or independence," Saiful said, adding an UP in a remote area can earn between Tk 50,000 and Tk 120,000 annually from business tax, which is determined on the basis of the size of the enterprises. The average annual budget for all activities of a UP ranges from Taka five to twenty lakh.
Chairman of Tebaria UP Omar Faruque said certain progress has been made in the last two years in his areas in terms of motivating people to pay tax, raise funds and utilise those for local development.
"We didn't know that the commercial enterprises can be a good source of income and local level development," he said adding, "We now hold meetings with the local people, ask them to pay tax and assure them of using the money for their welfare with full transparency."
"This is how the people are now motivated to pay tax as they find the money is utilised to solve their problems," Faruque said. His UP collect taxes from shops, rice mills, cinema halls, brick fields, petrol pumps and others entities, he added.
RTI sources said they have motivated nine unemployed youth volunteers from each UP to identify entities eligible for taxes and asses the amount of tax in five union parishads. These youths, after training, performed well to do the job, sources said.
"We have appointed one youth out of the nine as tax assessor and collector and he is doing well," Faruque said, adding they collect Taka 25 to 250 from shops and Taka 500 for each chimney of a brick-field per year. The amount, he said, is nothing for people to afford but they need motivation.
According to official sources, the government has empowered UPs, pourasabhas and city corporations to collect taxes under the Local Government Ordinance 1983 and provided them Model Tax Schedule in 2003 showing how to realise taxes.
Local government bodies in urban areas-pourasabhas and City Corporations-earn money from business or commercial taxes, but UPs seldom practice such, making them all-time government dependent for any activities at local levels.
The country has now 4,498 UPs, 309 pourasabhas and six city corporations as local government bodies. These bodies, according to official statistics, face acute fund constraints and look only at government to run their affairs.
The opinion is, however, contradicted by local government representatives, who say the central government has crippled them by taking away their rights from local resources.
An action research of RTI, a USAID supported organisation, said the 'business tax' could help UPs to generate an amount that is sufficient to meet their annual expenses for office and staff, which now comes from the central government.
The research conducted in five UPs in Natore district between 2006-08 showed that annual income from commercial enterprises in Tebaria, Dighapatia, Baraharishpur, Walia and Majgaon shot up by 20 to 176 per cent after piloting started in the areas two years ago.
"Business tax is a major potential sector for UPs to raise income from own sources to be self-reliant. But it is often ignored as the elected representatives do lack proper planning and expertise and fear of losing popularity," Saiful Islam, programme coordinator of RTI, told the news agency Friday.
Saiful, however, said the assessment and collection of the business tax, which is an addition to the income tax and licence fees, was a big challenge for the UPs, who are mainly run by grants from the government with a meagre income from their own.
"This way the UPs can move forward towards achieving self-reliance or independence," Saiful said, adding an UP in a remote area can earn between Tk 50,000 and Tk 120,000 annually from business tax, which is determined on the basis of the size of the enterprises. The average annual budget for all activities of a UP ranges from Taka five to twenty lakh.
Chairman of Tebaria UP Omar Faruque said certain progress has been made in the last two years in his areas in terms of motivating people to pay tax, raise funds and utilise those for local development.
"We didn't know that the commercial enterprises can be a good source of income and local level development," he said adding, "We now hold meetings with the local people, ask them to pay tax and assure them of using the money for their welfare with full transparency."
"This is how the people are now motivated to pay tax as they find the money is utilised to solve their problems," Faruque said. His UP collect taxes from shops, rice mills, cinema halls, brick fields, petrol pumps and others entities, he added.
RTI sources said they have motivated nine unemployed youth volunteers from each UP to identify entities eligible for taxes and asses the amount of tax in five union parishads. These youths, after training, performed well to do the job, sources said.
"We have appointed one youth out of the nine as tax assessor and collector and he is doing well," Faruque said, adding they collect Taka 25 to 250 from shops and Taka 500 for each chimney of a brick-field per year. The amount, he said, is nothing for people to afford but they need motivation.
According to official sources, the government has empowered UPs, pourasabhas and city corporations to collect taxes under the Local Government Ordinance 1983 and provided them Model Tax Schedule in 2003 showing how to realise taxes.
Local government bodies in urban areas-pourasabhas and City Corporations-earn money from business or commercial taxes, but UPs seldom practice such, making them all-time government dependent for any activities at local levels.
The country has now 4,498 UPs, 309 pourasabhas and six city corporations as local government bodies. These bodies, according to official statistics, face acute fund constraints and look only at government to run their affairs.
The opinion is, however, contradicted by local government representatives, who say the central government has crippled them by taking away their rights from local resources.