Economic specialists for economic ministries

FISCAL BUREAUCRACY: In New Zealand, strong economic specialisation and open recruitment policies within the civil service have produced tax policy bureaucrats identified as economists, had a high level of economic expertise, were very receptive to the neo-liberal ideas from the economics discipline, and took an activist approach to policy advice. Through the formulation and advocacy of reform ideas, officials influenced the policy preferences of politicians and led tax policy change in a neo-liberal direction.
In Ireland, the persistence of a generalist civil service with closed recruitment policies created a tax policy. Bureaucracts identified as civil servants, who had little economic expertise, was oblivious to micro-economic ideas about taxation, and took a passive approach to policy advice. These features allowed tax policy-making to be completely dominated by ideas and concerns of politicians, giving rise to a tax policy of low rates, narrow bases and specific tax incentives.
The crucial features of state structures in this regard are "the institutional mechanisms provided for allowing economic experts to participate in public policy making", which leave key state agencies "open or closed to the development or use of innovative perspectives". Sociologist Marion Fourcade takes this discussion one step further in her recent book about the differences in economic knowledge and the practice of economists in the US, the UK and France. Fourcade agrees with the importance of state structures for explaining the content and influence of economic knowledge. However, she argues that the historical-institutional approach to the state is too narrow and needs to be complemented by a more cultural understanding. "[Administrative] institutions are cultural objects that produce meaning- not simply organizational arrangements that filter access," she asserts. Fourcade puts forward an argument about how economic knowledge and the policy-making role of economists are shaped by the "administrative order", which she defines as "the modes of construction and incorporation of economic knowledge through policy making and policy advice".
The administrative orders of different countries vary both along structural lines-i.e. objective differences in the economic training of bureaucrats or in the division of responsibilities between ministries-and along cultural ones-i.e. subjective differences in the identities of economists and bureaucrats.
Fourcade incorporates both elements, analysing "how institutional differences in the very structure of these fields have shaped the social and intellectual trajectories of the groups of actors that populate them". Drawing on Fourcade, Johan Christensen singled out two structural aspects of administrative institutions that Christensen argued will shape the ideas and policy-making role of bureaucrats. First of all, the training of bureaucrats is of fundamental importance. In countries with a specialised civil service- such as the US-bureaucrats possess specific qualifications relevant to their position. This implies that most officials in economic ministries will be trained in economics. By contrast, in countries with a generalist civil service-most famously the UK bureaucrats do not have specific qualifications relevant to their position. They have a general education-traditionally in the classics or humanities-and get any specific training on the job (although in-house training is often limited). In generalist systems, there will thus be few economists in economic ministries. Johan Christensen's theoretical argument is that training will shape the policy role of bureaucrats through three channels: expertise, ideas and identity.
Specialised bureaucracies have greater technical skills than generalist ones, which can be expected to give officials a stronger role vis-a-vis politicians. Greater technical expertise can augment the policy influence of officials by increasing their ability to set the policy agenda (active role), to evaluate and counter the policy proposals of politicians (reactive role), and to warn politicians about deficiencies of existing policies (proactive role).
Second, economic ministries dominated by economic specialists will be more receptive to theoretical developments within the field of economics than generalist bureaucracies. The greater penetration of new ideas from the economics discipline will on the one hand define the substantive policy ideas of officials. On the other hand, it may expand the policy role of officials by "encouraging leading state officials to pursue transformative strategies". The argument that strong ideas can increase policy leverage is put forward by B. Guy Peters, who sees "policy-specific ideologies"-i.e."well-developed ideas about what government should do [in] the narrow area of expertise of the agency"-as a weapon of the bureaucracy in the struggle against politicians over policy-making power.
"The existence of such an ideology is important for the success of the agency in dealing with political institutions. Political actors rarely have a ready reply to such policy-­specific ideologies. They labour under a number of disadvantages in competing with the bureaucrats, not the least of which is a frequent lack of any specific policy ideas".
The intuition is that the presence of clear policy ideas gives officials the upper hand in the policy-making process by increasing their agenda-setting power. In organisations with strong analytical expertise and a strong ideology, officials not only have the ability derived from expertise to set the agenda, they also have the substantive ideas and the ideological motivation to do so.
Third, in generalist systems officials will identify first and foremost as civil servants, while there will be stronger identification along professional lines in specialised bureaucracies. This writer's argument is that the subjective identity of bureaucrats will have consequences for their approach to policy advice by influencing what is perceived as appropriate behaviour. Officials that identify exclusively as public servants will be more sensitive to norms that define clear boundaries between the roles of bureaucrats and ministers, leading them to take a restrained approach to policy advice. Officials with a strong professional identification will be less attentive to such norms and more concerned about 'doing what is right' according to their professional views, inducing them to take a more activist approach to policy advice.
Stronger professional identification can thus be connected to a more prominent policy role for officials, as it increases the willingness to set the policy agenda, counter the policy proposals of politicians, and warn politicians about the flaws of existing policy. A second important aspect of administrative institutions is their openness in terms of recruitment. In closed administrative systems most bureaucrats are recruited from inside the civil service class. These institutions thus tend to be populated by lifetime bureaucrats. In open administrative systems there is greater recruitment of outsiders such as academics, new university graduates, people from the private sector, or even foreign experts. Public servants in open systems thus tend to have experience from other spheres and remain in the bureaucracy for shorter periods of time.
Johan Christensen argues that the openness of bureaucratic institutions in terms of recruitment will shape the policy-making role of officials through the same three channels of expertise, ideas and identity. First, open recruitment policies allow bureaucratic agencies to draw on expertise from the outside-from the academic world, the private sector or other countries- and to pick up 'the best and the brightest' right out of university, thereby boosting the expertise in the organization. Second, open systems allow for a greater influx of new economic ideas because the admission of academics, foreign experts and graduates just out of economics programmes creates channels for the diffusion of ideas from the economic discipline to the bureaucracy. In closed system, these channels will be cut off.  Third, systems with closed recruitment tend to generate a strong common identity as civil servants. Open recruitment will weaken this shared identification since bureaucrats recruited from the outside carry with them other identities from their educational or professional background. Christensen thus expects officials in institutions that are open in terms of recruitment to have a higher level of economic expertise, to be more inspired to new economic ideas, and to have a weaker identity as civil servants. As specified above, Christensen expects these features to strengthen the role of officials in policy-making.
INSTITUTIONALISATION OF ECONOMIC KNOWLEDGE: What explains the differences in the economic ideas and the policy-making role of bureaucrats? An often-stated criticism of the state-centred literature was that it did a poor job of accounting for this variation, especially the differences in the preferences of the state. However, this criticism appears somewhat exaggerated, as Margaret Weir and Theda Skocpol deal explicitly with these questions in their study of the influence of Keynesian economic ideas on responses to the Great Depression in the U.S., the U.K. and Sweden. Main argument of Weir and Skocpol is that the policy-making access of economic experts and the substantive content of their ideas are shaped by state structures. They argue that various specific structures of states affect "processes of intellectual innovation" and "pattern the ways in which experts and their ideas enter into public policy making", thereby affecting "the possibilities for new economic ideas to be formulated and applied to innovative government policies".
VAT ADMINISTRATION IN BANGLADESH: VAT in Bangladesh is administered by the ex-Customs Department officials under the indirect tax wing of the NBR (National Board of Revenue). The study of the organisation of the administration of VAT in different countries shows that VAT is administered by one of  the three departments, namely domestic tax department that administers personal and corporate income tax, Customs Department, and VAT Department.
While most of the VAT-adopting countries administer VAT through the Domestic Tax Department, there are a few countries that have VAT being administered by the Customs Department. By 2001, of the 108 countries studied, 90 countries have VATs administered by the Domestic Tax Department, 4 by the Customs Department and 14 by the VAT Department. Bangladesh is one of the few countries where the VAT is administered by the Customs and Excise Department, or, in other words, the indirect tax wing of NBR. After introduction of VAT, the Customs and Excise Department was re-named as the 'Customs, Excise and VAT Department'. The operational activities of VAT administration are performed by 250 circle offices which are defined in the VAT law and rules as the local VAT offices. Spread over the country with higher concentration in business districts, they are pivotal to the collection of VAT revenue. Each Circle office is headed by a Revenue Officer having the status of a class-I gazetted officer. The Circle offices are monitored by 80 Division offices which in turn are supervised by 12 Commissionerates.
Though of late there has been some attempt to replace the territorial jurisdiction by a jurisdiction-based job description, each Circle office traditionally is divided into some geographical locations i.e. some blocks/areas/ranges, as it had been during the excise regime. Among its staff members, 16 officers of the ranks from Asstt. Commissioner up to a Commissioner belong to the Customs and Excise Cadre of the Bangladesh Civil Service. Previously only the officers belonging to the Customs and Excise cadre used to work alternately in Customs and VAT wings; now all employees of the Customs and VAT departments work, in turn, in both the departments. As opposed to the traditional geographical jurisdiction-based operation of VAT administration that spans the country, the Board has formed a Large Taxpayers Unit (LTU) meant to service the large taxpayers selected on the basis of their annual turnover and irrespective of their geographical location. The LTU is meant to be a function-based unit. Currently VAT LTU has 156 registered taxpayers, each remitting a minimum amount of VAT revenue of Tk 50 million to the government exchequer annually.
The designations of superintendent and inspectors were changed respectively to revenue officer and assistant revenue officer in 2010 through the Finance Act of that year.   During the whole span of the excise system and the early period of VAT, the tax jurisdictional territory was called 'Collectorate' and the title of the civil servants working in both Customs, Excise and VAT Department was 'Collector.' This designation was changed to 'Commissioner' in 1995. This change, though not liked by many traditionalists inside the Customs Department as it obliterated the historical specialty of the Customs Department in the country, was  prompted by the practice in other countries. Advocates of this change, however, defended the change in nomenclature from 'collector' to 'commissioner' as it reflected the shift of approach in tax collection, the core of which was self-assessment and self-clearance.  The Bangladesh VAT Department is staffed by the following categories of officers: Commissioner/Director General, Additional Commissioner/Addl. Director General, Joint Commissioner/ Director, Deputy Commissioner, Asstt. Commissioner, Revenue Officer and Astt. Revenue Officer. The total number of working staff in the indirect taxes was 4,807 in 2010 against the sanctioned strength of 7,494.
In Bangladesh, the revenue service cadre officials are not posted considering their economic, commercial and accounting or mathematical background. Selections take place on choice and thus officials with generalist educational background enjoy the opportunity under the existing examination and selection process whereas the revenue cadre officials need economic, commercial, mathematical and accounting backgrounds, which are followed in many countries. However, following the British system, Bangladesh's civil service allows generalists to work in the revenue cadre service. This limits them to enter into details of accounting techniques in the VAT registered and corporate taxpayer firm's books of accounts and currently computerised accounting systems. On the other hand, the corporate tax payers employ professional accountants with expertise of computerised accounting system.  So, there is need to reconsider the core competence of the revenue cadre officials recruitment in the recruitment and placement including reorganisation of the revenue department as a whole for functional, territorial, and line aspects. Even after 44 years of independence, the Bangladesh government has not constructed an office building for the National Board of Revenue for bringing the country's most important department under one umbrella. The revenue cadre officers sitting at garage-like rented offices in Kakrail and different other places will collect revenue of Tk 2 billion (2 lakh crore) plus in the year 2015-16 fiscal. There is a criticism that the NBR Chairman and members have no financial power to spend any money or take any capital expenditure decision without permission from the Finance Ministry.  In 1997, the Bangladesh Bank, by constructing a building, consolidated its office under one umbrella and reduced a lot of duplication in their functional process. Similarly, the ICT ministry constructed its office at Agargaon which is comparable with any office of the western countries. The NBR should emulate the Bangladesh Bank and the ICT ministry.
The writer, who holds PhD and FCA, is General Secretary, Bangladesh Economic Association and Chairman, Emerging
Credit Rating Limited. [email protected]