No alternative to increasing revenue collection
Total earnings, expenditure and funds are the basic synopsis of a budget. There is a link between revenue earnings and the Gross Domestic Product (GDP) growth. In South Asia, indeed, in the rest of the world, revenue earnings are at the lowest compared to the GDP.
One hand we are marching towards becoming a mid-income country, and on the other hand we are maintaining this lowest rate of revenue-GDP. This cannot be accepted. Setting a 8.2 percent GDP growth and giving the National Board of Revenue (NBR) a Tk 3,300 billion (Tk 3,30,000 crore) revenue collection target seem unrealistic.
If revenue collection is less, expenditure must be curbed. Unless unnecessary expenditure is curtailed, the deficit will increase. The government will then have to borrow excessively to meet this deficit. Many developed countries too will face a reduced revenue collection due to COVID-19. So in our case the budget deficit may well be 6 percent of the GDP.
In the first six months of the new financial year, there is no guarantee of being able to emerge from the impact of COVID. Along with all other difficulties, the two problems which loom large are the negative state of export income and overseas remittance. Our large export markets, the US and Europe, themselves are going through hard times.
It would not be wise to turn to commercial banks too much for loans. These banks are in dire straits as it is. The government can borrow from the central bank. In simple terms this means printing money. Many fear that this will push up inflation. This won’t go up now as people’s demands are low at the moment.
There are so many people who qualify to pay taxes at an upazila and even union level. The government doesn’t reach out to them. The government may think this will put a dent in its popularity. But there is no alternative to increasing revenue collection. The sooner the government realises this, the better it will be for the government and the people.
The good news is that foreign loans are available, but we need to bargain. We must try hard for soft loans as well as grants. But all these are stop-gap measures.
Increasing revenue earnings is the basic task at hand. The government is not attentive to revenue collection. There is scope to increase income but the government is not utilising this. There is excessive tax evasion. There are so many people who qualify to pay taxes at an upazila and even union level. The government doesn’t reach out to them. The government may think this will put a dent in its popularity. But there is no alternative to increasing revenue collection. The sooner the government realises this, the better it will be for the government and the people.
* AB Mirza Md Azizul Islam is former caretaker government advisor.
This piece has been rewritten in English by Ayesha Kabir