Falling DSE turnover hits govt earnings

The revenue earnings of the government from the Dhaka Stock Exchange (DSE) fell 8.0 per cent in the first 10 months in the current fiscal year (FY) compared to the same period of last FY, as the turnover was witnessing a declining trend.
The market insiders said the government's earnings from the DSE fell due mainly to the fall in turnover, as earnings are related to the turnover.
The government bagged tax worth Tk 1,314.44 million in July '15 to April '16 period of the FY 2015-2016 against Tk 1,433.81 million in the corresponding period of the previous fiscal, according to statistics from the DSE.
The government earned the amount on TREC (trading right entitlement certificate) holders' commission and share sales by sponsor-directors and placement holders.
Of the total earnings in the first 10 months of the current FY, Tk 909.65 million came from the TREC holders' commission and Tk 405.08 million from the share sales by sponsor-directors and placement holders, the DSE data showed.
The DSE on behalf of the government, collects the tax as TREC holders' commission and share sales by sponsor-directors and placement holders at the rate of 0.05 per cent and 5.0 per cent respectively and deposits the amount to the government exchequer.
However, month-on-month, the government earnings from the DSE rose 5.83 per cent in April compared to the month of March, as sponsor/directors shares sales increased significantly during the period, which helped in higher revenue collection.
In April, the government received revenue worth Tk 125.34 million while the revenue collection in March was Tk 118.43 million, the DSE data showed.
"Though the month-on-month revenue collection rose slightly in April, overall revenue collection remained low due to lower transactions following the sluggish trend in stock prices," said a DSE official.
The daily average turnover on the DSE hovered between Tk 3.50 billion and Tk 4.0 billion in the current FY, while it was Tk 4.22 billion in the last FY.
DSEX, the benchmark index of the DSE, lost around 162 points or 3.71 per cent in April, as it was 4,357 points at opening of the month and closed the month at 4,195 points.
"The earnings are related to turnover. It's usual that tax will fall if turnover declines," said an analyst at a leading brokerage firm.
The turnover marked a decline in the 10 months of the current FY, compared to the same period of last FY, so did tax, he added.
DSE data showed that in the last three fiscal years, the revenue earnings of the government from the stock market declined due to slide in stock prices.
The government's revenue collection from DSE was Tk 2.72 billion in FY 2011-12, Tk 1.27 billion in FY 2012-13, Tk 1.54 billion in FY 2013-14 and Tk 1.74 billion in FY 2014-15.
However, the highest revenue collection of Tk 4.47 billion was in the FY 2010-11, when the stock market was in a bullish mood.
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