Challenges before the government
Monday, 23 March 2009
Amirul Islam
Election promises are vital because the same make it clear to people what a party or parties would do for their good in different ways for going to power. But keeping the promises forms the challenge as resources are required for this purpose and resources do not fall from the sky. The resources are scarce and the same have to be mobilized adequately and then efficiently allocated between competing priorities for optimum returns and satisfaction of people's various needs and desires.
The winners in the recent elections in Bangladesh made known what they intended to do on going to power. The pledges range from decreasing the costs of living to boosting energy supply and production in other spheres. It should be obvious that the fulfilling of the promises will call for sufficient resources. For example, it was revealed that the government considered giving input support to farmers or provide inputs at subsidized prices so that the latter can sell off their produce at lower prices after benefiting from the subsidies. Thus, supply of food grains and other agricultural produces at lower prices for end users are contemplated. Some actions have already been taken in these areas.
Meanwhile, the new government will also have to increase subsidies in other spheres to implement the commitments made in the election manifesto. But the keeping of these commitments will essentially involve mobilisation of resources at the appropriate level to match its intended expenditure patterns.
There are some uncertainties in the ways of mobilising such resources. First of all, there are worries about foreign aid. Although it is stated that multilateral donor agencies have no shortage of funds presently for the prospective recipients like Bangladesh, the amounts of direct bilateral aid from donor countries may fall significantly in the near future as a result of the economic downturn in these countries. Even the donor agencies may feel strapped for funds as the recession in the developed or rich countries further deepens. Therefore, it should be only prudent for the government to rely more on the mobilization of the country's own resources. This need will be all the greater if earnings from export and remittances also start falling substantially from a point of time in connection with Bangladesh.
The government will need to take the greatest care to maintain and improve export earnings and remittances amid the global economic uncertainties. This task will be a very challenging one. The caretaker government left the findings and prescriptions of a technical committee it formed to advise the elected government on what to do in the face of the global economic crisis. The elected government should consider these proposals quickly and implement them wherever needed. But it should lose no time in getting and implementing also the recommendations of the task force which it has just set up in this connection.
The government should revamp the revenue administration to boost its revenue earnings. Some 10 million persons in Bangladesh, as was reported earlier in the media, earn more than the tax exemption limit. But income tax returns are submitted by about 0.6 million (6.0 lakh) of them which suggests that there is the prospect of realizing income tax from a vast number. Customs duties, so far, have been the greatest source of revenues. But earnings from this source are noted to be declining in the current year from a fall in prices of imported merchandise in the global market and also because of duty reductions that were earlier effected to. This points to the urgent need of undertaking greater activities in the areas of income tax and value added tax (VAT) collection.
Traditionally, elected and political governments are seen to be prone to be lenient in respect of revenue collection to keep pleased their supporters and vested interests. But this will no more be possible in the changed circumstances. The government will be expected to radically change its outlook and go for vigorously increasing tax collection where the opportunities for the same exist.
Election promises are vital because the same make it clear to people what a party or parties would do for their good in different ways for going to power. But keeping the promises forms the challenge as resources are required for this purpose and resources do not fall from the sky. The resources are scarce and the same have to be mobilized adequately and then efficiently allocated between competing priorities for optimum returns and satisfaction of people's various needs and desires.
The winners in the recent elections in Bangladesh made known what they intended to do on going to power. The pledges range from decreasing the costs of living to boosting energy supply and production in other spheres. It should be obvious that the fulfilling of the promises will call for sufficient resources. For example, it was revealed that the government considered giving input support to farmers or provide inputs at subsidized prices so that the latter can sell off their produce at lower prices after benefiting from the subsidies. Thus, supply of food grains and other agricultural produces at lower prices for end users are contemplated. Some actions have already been taken in these areas.
Meanwhile, the new government will also have to increase subsidies in other spheres to implement the commitments made in the election manifesto. But the keeping of these commitments will essentially involve mobilisation of resources at the appropriate level to match its intended expenditure patterns.
There are some uncertainties in the ways of mobilising such resources. First of all, there are worries about foreign aid. Although it is stated that multilateral donor agencies have no shortage of funds presently for the prospective recipients like Bangladesh, the amounts of direct bilateral aid from donor countries may fall significantly in the near future as a result of the economic downturn in these countries. Even the donor agencies may feel strapped for funds as the recession in the developed or rich countries further deepens. Therefore, it should be only prudent for the government to rely more on the mobilization of the country's own resources. This need will be all the greater if earnings from export and remittances also start falling substantially from a point of time in connection with Bangladesh.
The government will need to take the greatest care to maintain and improve export earnings and remittances amid the global economic uncertainties. This task will be a very challenging one. The caretaker government left the findings and prescriptions of a technical committee it formed to advise the elected government on what to do in the face of the global economic crisis. The elected government should consider these proposals quickly and implement them wherever needed. But it should lose no time in getting and implementing also the recommendations of the task force which it has just set up in this connection.
The government should revamp the revenue administration to boost its revenue earnings. Some 10 million persons in Bangladesh, as was reported earlier in the media, earn more than the tax exemption limit. But income tax returns are submitted by about 0.6 million (6.0 lakh) of them which suggests that there is the prospect of realizing income tax from a vast number. Customs duties, so far, have been the greatest source of revenues. But earnings from this source are noted to be declining in the current year from a fall in prices of imported merchandise in the global market and also because of duty reductions that were earlier effected to. This points to the urgent need of undertaking greater activities in the areas of income tax and value added tax (VAT) collection.
Traditionally, elected and political governments are seen to be prone to be lenient in respect of revenue collection to keep pleased their supporters and vested interests. But this will no more be possible in the changed circumstances. The government will be expected to radically change its outlook and go for vigorously increasing tax collection where the opportunities for the same exist.