United we stand, divided we fall
Tuesday, 24 April 2012
Md Nurul Islam Sohel
Once there were four engineers traveling in a car. While they were traveling to their destination, the car stalled on them.
The first one who was a mechanical engineer, said, "don't worry, it's probably an engine problem. I"ll just pop open the hood and take a look at the motor".
The second, who was an electrical engineer, said, "no, no, no. it's an electrical problem. Let me look at the fuse box and I'll find the problem".
The third engineer, who was a chemical engineer, said, "it's just a problem with the fuel. Flush all of the gas and replace it with new gas and you'll see that the car will be fine."
Then the three engineers looked at the fourth who was a "Microsoft" computer engineer. And his response was. "Why don't we just get out of the car, shut all of the doors, and then open them again and get back in and start it!"
Bangladesh is now passing through a critical point in time in its national life. Among other challenges, generation and supply of power is one of the most imperative one. It is a national precedence but observing the motion of the concerned authority it seems that priority is only in word not in work. The Power Development Board (PDB) is complaining about not having gas supply for power generation. On the other hand, Bangladesh Petroleum Corporation (BPC) is not contented with the amount of electricity production by PDB. The incumbent government is busy with tackling the opposition who are with protesting the ruling party. The people remain unheard until any election comes. As soon as the election is over, common people can not see their leaders in person, rather, they watch them on television or in newspapers. Many of us are trying best how to dodge tax. In a word, everybody is busy with finding faults with others skipping his or her role. Everybody is for himself. Apparently the total nation is divided. No unity of goal is seen. People have heard enough blame games among the top authorities concerned. This game should be brought to a halt right now.
People in pastoral areas suffer more than those in urban areas from low access to electricity. Even those who have electricity experience recurrent outages and poor quality power. Power load shedding has already commenced. As temperature goes higher, load shedding would increase. Some say making fun that not having electricity connection at all may be one of the best ways to keep free from the bane of load shedding. At present 59% of Bangladeshis are enjoying this boon so far. The most interesting stuff is that load shedding has not increased alone; cost of energy has gone up too. In 2009 when the present government took over, the reported demand was 5500MW against which generation was 3500MW. If in three years demand grew by 1500MW it should be 7000 MW and if government added 3000MW new power by this time, the generation should be 6500MW. If all figures are true, 500MW national shortfall must not create any panic.
There must be something wrong somewhere. The country can currently generate about 4500 megawatts (MW), while peak demand can be as high as 6000 MW. According to the World Bank with only 41% of Bangladeshis having access to electricity, the per capita energy use is only 252 Kilowatt-hours (kwh), which is one of the lowest in the region. This figure is 597 kwh in India and 449 kwh in Pakistan. If this is the actual picture still a long way to go for realizing the 2021 vision. Yet, let us not worry but hope for the best.
We all know that one of the main reasons for the prolonged crisis is the miserable failure to arrange required fuel - gas and coal for power generation. The authority could not initiate actions to explore and exploit significant high quality own coal exploration and exploitation. All of the past and present incumbent governments also failed to aggressively explore for natural gas in onshore frontiers and vast offshore.
Question may crop up, why is this failure? Is it due to lack of money or proper management or something like that? Whatever the reason this, the sector deserved, deserves and will deserve the highest preference in respect of any kind of development and digitalization.
If fund crisis is the foremost factor, the people must make out whether they are paying due tax or levy to the exchequer. If fund management is a problem, the incumbent government must see the issue meticulously as a genuine representative of the people. We must remember identification of problem is the first and foremost step to bring a solution to. It's really imprudent to say others to find out our own problems. We must diagnose our key problems to address without depending on the donor agencies.
There is no denying that in a poor country like ours, money is always a major factor in each and every decision-making. Government cannot be an exception to this. Managing the demands by scarce resources is the study of economics and this is a reality. Here lies the necessity of intelligent fund management. The National economy is bleeding from subsidy burden. The total subvention, including that for oil, for the fiscal year up to June 2012 is forecast to jump to around Tk460 billion or 5.0 per cent of gross domestic product (GDP), more than double the original estimate of Tk 200 billion, and up from Tk 195 billion the previous year. To address this burden, government has decided to raise the prices of the fuel and power tariff. In this miserable state of affairs, the government has decided to borrow Tk 279 billion from the country's banking sector against the original budgetary target of Tk 189.57 billion. This type of borrowing is something ominous for the overall economy of a country.
The consequences will be massive in response to the government borrowing from banks. No doubt this borrowing from the banking sector will result in credit dearth in the commercial banks and the private sector development will be adversely impact. Consequently, now employment generation will be about impossible and the purchasing power of the people will shrink. Moreover, for costly fuel and power, the commodity prices will swell; the whole economy will be in a serious trouble. One third of the country's 160 million people live on less than $2.0 a day and they will be the worst sufferers.
Recently, the government has decided to supply uninterrupted power to industries at higher rates. It will ultimately augment the price of the commodity because the manufacturers will add this extra cost, resulting in higher sales prices of the goods. Prices of essentials may not be a big problem if the consumers have that purchasing power. Here again lies the predicament because unemployment is there. For employment generation new investment is a must but this investment is also facing lots of impediments like lack of sufficient capital, infrastructure, and political stability.
Without any iota of doubt, it can be said that the national exchequer is in a fund crisis and it should be addressed very intelligently. Government's financing means should not be same as that of private sector. One of its major funding sources is tax from the people. Tax, in fact, is the most sustainable source of finance for progress. A poor developing country like Bangladesh must have the aspiration to trim down its foreign aid dependence, with self-sufficiency in tax revenues.
A 10 per cent tax-GDP ratio is a very poor one when in many affluent countries, the ratio is as high as 40 per cent.
Before going to seeking finance from elsewhere there is a room to consider seriously about whether the state is realizing the revenue properly. Bangladesh has around 2.3 million registered income tax payers, of whom only 0.75 million pay taxes. This indicates that suspected revenue dodgers are very large in number. With less than 1.0 per cent of the populace remaining under the tax net and tax-GDP ratio at only 10 per cent, one can guess well the scale of tax evasion in this state. The riches that many people exhibit publicly and their lifestyles do not match with the tax returns they submit every year. The tax administration is yet to turn out to be strong and effective enough to lessen the incidence of large-scale tax evasion.
According to Tax Justice Network (TJN), a British research organization the volume of the black economy in Bangladesh is US$100 billion that is 35.30 per cent of Gross Domestic Product (GDP). But the finance ministry had put the size of the black economy in between 44 per cent and 80 per cent. TJN found Tk 214.50 billion of tax evasion incidence in 2011 in Bangladesh. Some experts claimed that the TJN estimate about tax evasion in 2011 was even less than the amount of tax evaded by the people having tax identification numbers (TINs). Beyond the TIN holders, there are millions of people who despite having taxable income do not pay any tax to the government.
Undeniably, we, the ordinary people, must shoulder our duties from patriotic point of view. A conscious citizen can never and ever adopt any means for evading tax. In fact, paying due tax to the state is a moral responsibility because we, the people, have delegated the authority to the government to run the country. Now, if they are not financed by us, how will the assignment be discharged? Only power has nothing to do because we all know money does matter.
A citizen dodging government levy, loses his/her patriotism morally. The
problem gets worse when the people have room to complain about fairness of tax collecting authority. When a regular tax payer sees someone dodging tax with the connivance of tax and incumbent government officials, s/he feels discouraged to continue. There are very few honest people in our society who does his own part as a responsible one. The situation turns to insoluble when they witness their money is being wasted or misused. In this point, the entire system gets caught in a vicious cycle.
With a view to coming out this cycle, there needs some one to bell the cat. Who will be this someone, the government or the people? Being the delegate it is none but the government. If the government can maintain a good tax administration and transparency, it will have the moral strength to compel the people to pay tax. Otherwise, it is quite impossible to come out from this cycle.
So to get to the bottom of this topmost national issue, an all-inclusive endeavour with the involvement of all the stakeholders is a must. The commoners should not shun the responsibility of doing their part of the job. The government single-handedly can do nothing if it is not financially supported. Paying the due amount of tax to the public exchequer must be ensured for helping in governing the country as well as the government must maintain a congenial environment for collection of taxes properly and spend public money with utmost transparency and accountability. Can't we rely on ourselves? If not, let us all try to be trustworthy and trust others because united we stand, divided we fall.
The writer is a banker. [email protected]
Once there were four engineers traveling in a car. While they were traveling to their destination, the car stalled on them.
The first one who was a mechanical engineer, said, "don't worry, it's probably an engine problem. I"ll just pop open the hood and take a look at the motor".
The second, who was an electrical engineer, said, "no, no, no. it's an electrical problem. Let me look at the fuse box and I'll find the problem".
The third engineer, who was a chemical engineer, said, "it's just a problem with the fuel. Flush all of the gas and replace it with new gas and you'll see that the car will be fine."
Then the three engineers looked at the fourth who was a "Microsoft" computer engineer. And his response was. "Why don't we just get out of the car, shut all of the doors, and then open them again and get back in and start it!"
Bangladesh is now passing through a critical point in time in its national life. Among other challenges, generation and supply of power is one of the most imperative one. It is a national precedence but observing the motion of the concerned authority it seems that priority is only in word not in work. The Power Development Board (PDB) is complaining about not having gas supply for power generation. On the other hand, Bangladesh Petroleum Corporation (BPC) is not contented with the amount of electricity production by PDB. The incumbent government is busy with tackling the opposition who are with protesting the ruling party. The people remain unheard until any election comes. As soon as the election is over, common people can not see their leaders in person, rather, they watch them on television or in newspapers. Many of us are trying best how to dodge tax. In a word, everybody is busy with finding faults with others skipping his or her role. Everybody is for himself. Apparently the total nation is divided. No unity of goal is seen. People have heard enough blame games among the top authorities concerned. This game should be brought to a halt right now.
People in pastoral areas suffer more than those in urban areas from low access to electricity. Even those who have electricity experience recurrent outages and poor quality power. Power load shedding has already commenced. As temperature goes higher, load shedding would increase. Some say making fun that not having electricity connection at all may be one of the best ways to keep free from the bane of load shedding. At present 59% of Bangladeshis are enjoying this boon so far. The most interesting stuff is that load shedding has not increased alone; cost of energy has gone up too. In 2009 when the present government took over, the reported demand was 5500MW against which generation was 3500MW. If in three years demand grew by 1500MW it should be 7000 MW and if government added 3000MW new power by this time, the generation should be 6500MW. If all figures are true, 500MW national shortfall must not create any panic.
There must be something wrong somewhere. The country can currently generate about 4500 megawatts (MW), while peak demand can be as high as 6000 MW. According to the World Bank with only 41% of Bangladeshis having access to electricity, the per capita energy use is only 252 Kilowatt-hours (kwh), which is one of the lowest in the region. This figure is 597 kwh in India and 449 kwh in Pakistan. If this is the actual picture still a long way to go for realizing the 2021 vision. Yet, let us not worry but hope for the best.
We all know that one of the main reasons for the prolonged crisis is the miserable failure to arrange required fuel - gas and coal for power generation. The authority could not initiate actions to explore and exploit significant high quality own coal exploration and exploitation. All of the past and present incumbent governments also failed to aggressively explore for natural gas in onshore frontiers and vast offshore.
Question may crop up, why is this failure? Is it due to lack of money or proper management or something like that? Whatever the reason this, the sector deserved, deserves and will deserve the highest preference in respect of any kind of development and digitalization.
If fund crisis is the foremost factor, the people must make out whether they are paying due tax or levy to the exchequer. If fund management is a problem, the incumbent government must see the issue meticulously as a genuine representative of the people. We must remember identification of problem is the first and foremost step to bring a solution to. It's really imprudent to say others to find out our own problems. We must diagnose our key problems to address without depending on the donor agencies.
There is no denying that in a poor country like ours, money is always a major factor in each and every decision-making. Government cannot be an exception to this. Managing the demands by scarce resources is the study of economics and this is a reality. Here lies the necessity of intelligent fund management. The National economy is bleeding from subsidy burden. The total subvention, including that for oil, for the fiscal year up to June 2012 is forecast to jump to around Tk460 billion or 5.0 per cent of gross domestic product (GDP), more than double the original estimate of Tk 200 billion, and up from Tk 195 billion the previous year. To address this burden, government has decided to raise the prices of the fuel and power tariff. In this miserable state of affairs, the government has decided to borrow Tk 279 billion from the country's banking sector against the original budgetary target of Tk 189.57 billion. This type of borrowing is something ominous for the overall economy of a country.
The consequences will be massive in response to the government borrowing from banks. No doubt this borrowing from the banking sector will result in credit dearth in the commercial banks and the private sector development will be adversely impact. Consequently, now employment generation will be about impossible and the purchasing power of the people will shrink. Moreover, for costly fuel and power, the commodity prices will swell; the whole economy will be in a serious trouble. One third of the country's 160 million people live on less than $2.0 a day and they will be the worst sufferers.
Recently, the government has decided to supply uninterrupted power to industries at higher rates. It will ultimately augment the price of the commodity because the manufacturers will add this extra cost, resulting in higher sales prices of the goods. Prices of essentials may not be a big problem if the consumers have that purchasing power. Here again lies the predicament because unemployment is there. For employment generation new investment is a must but this investment is also facing lots of impediments like lack of sufficient capital, infrastructure, and political stability.
Without any iota of doubt, it can be said that the national exchequer is in a fund crisis and it should be addressed very intelligently. Government's financing means should not be same as that of private sector. One of its major funding sources is tax from the people. Tax, in fact, is the most sustainable source of finance for progress. A poor developing country like Bangladesh must have the aspiration to trim down its foreign aid dependence, with self-sufficiency in tax revenues.
A 10 per cent tax-GDP ratio is a very poor one when in many affluent countries, the ratio is as high as 40 per cent.
Before going to seeking finance from elsewhere there is a room to consider seriously about whether the state is realizing the revenue properly. Bangladesh has around 2.3 million registered income tax payers, of whom only 0.75 million pay taxes. This indicates that suspected revenue dodgers are very large in number. With less than 1.0 per cent of the populace remaining under the tax net and tax-GDP ratio at only 10 per cent, one can guess well the scale of tax evasion in this state. The riches that many people exhibit publicly and their lifestyles do not match with the tax returns they submit every year. The tax administration is yet to turn out to be strong and effective enough to lessen the incidence of large-scale tax evasion.
According to Tax Justice Network (TJN), a British research organization the volume of the black economy in Bangladesh is US$100 billion that is 35.30 per cent of Gross Domestic Product (GDP). But the finance ministry had put the size of the black economy in between 44 per cent and 80 per cent. TJN found Tk 214.50 billion of tax evasion incidence in 2011 in Bangladesh. Some experts claimed that the TJN estimate about tax evasion in 2011 was even less than the amount of tax evaded by the people having tax identification numbers (TINs). Beyond the TIN holders, there are millions of people who despite having taxable income do not pay any tax to the government.
Undeniably, we, the ordinary people, must shoulder our duties from patriotic point of view. A conscious citizen can never and ever adopt any means for evading tax. In fact, paying due tax to the state is a moral responsibility because we, the people, have delegated the authority to the government to run the country. Now, if they are not financed by us, how will the assignment be discharged? Only power has nothing to do because we all know money does matter.
A citizen dodging government levy, loses his/her patriotism morally. The
problem gets worse when the people have room to complain about fairness of tax collecting authority. When a regular tax payer sees someone dodging tax with the connivance of tax and incumbent government officials, s/he feels discouraged to continue. There are very few honest people in our society who does his own part as a responsible one. The situation turns to insoluble when they witness their money is being wasted or misused. In this point, the entire system gets caught in a vicious cycle.
With a view to coming out this cycle, there needs some one to bell the cat. Who will be this someone, the government or the people? Being the delegate it is none but the government. If the government can maintain a good tax administration and transparency, it will have the moral strength to compel the people to pay tax. Otherwise, it is quite impossible to come out from this cycle.
So to get to the bottom of this topmost national issue, an all-inclusive endeavour with the involvement of all the stakeholders is a must. The commoners should not shun the responsibility of doing their part of the job. The government single-handedly can do nothing if it is not financially supported. Paying the due amount of tax to the public exchequer must be ensured for helping in governing the country as well as the government must maintain a congenial environment for collection of taxes properly and spend public money with utmost transparency and accountability. Can't we rely on ourselves? If not, let us all try to be trustworthy and trust others because united we stand, divided we fall.
The writer is a banker. [email protected]