Finance for boosting non-tax revenue

The finance ministry is pressing various ministries and divisions for steps with an eye to increasing non-tax revenue for the upcoming fiscal year, 2025-26.

The development came from tripartite meetings with different line ministries hosted to discuss budget estimates for the next fiscal and projections for the following two years.

The FE has analysed at least 10 minutes of those meetings.

The government has faced challenges in meeting its non-tax revenue targets in recent years, with frequent shortfalls despite occasional overachievements, according to the official data.

The finance division data disclosed that achievements in the indicator in the latest three consecutive years remained around 80 per cent of the targets.

Several ministries and divisions received non-tax revenue worth Tk 392.55 billion last fiscal, which was only 78.51 per cent of Tk 500 billion targeted.

The non-tax revenue generation in fiscal year 2023-24 dropped only 54.9 per cent of Tk 591.92 billion received in fiscal year 2020-2021.

Experts and economists argue that the stagnation in non-tax revenue is largely due to inefficiency, corruption and mismanagement within government agencies.

Despite massive government investments in these agencies and state-owned corporations, according to them, no substantial dividends are being generated.

At the same time, significant amounts are being extracted from service recipients through corrupt practices, even though official service fees remain nominal.

Instead of raising service charges, the experts recommend enhancing revenue through better governance and improved management.

Sources said the secondary education division proposed target of Tk 1.39 billion to generate revenue in the next fiscal year, but the tripartite meeting recommended setting a target for Tk 1.49 billion.

Finance division secretary spoke about some possibilities to boost revenue through updating several fees for services of the departments and directorate of the education division.

Siddique Zobair, senior secretary of the division, told the meeting, "It's possible to increase non-tax revenue through updating admission and tuition fees of the directorate of secondary and higher education (DSHE).

In another meeting with the Technical and Madrasah Education Division (TMED), finance division officials said the primary sources of revenue for the TMED are tuition and admission fees it collects.

As the fees were last revised in 2014, updating them holds significant potential for increased revenue collection. Dr KM Kabirul Islam, senior secretary of the TMED, agreed to the opinion.

In another meeting with post and telecommunications division, finance officials said the primary sources of revenue are fees, renewal charges and compensation fees collected from mailing operators and courier service-licensing authorities.     Post and telecoms officials have thus been advised to include additional income sources-such as recruitment test fees and vehicle usage charges-in its revenue targets. The meeting also urged to settle Tk 34.58 billion in debt service liability (DSL) dues.

Meanwhile, the ministry in question has established a revenue collection target of Tk 61.89 billion.

Considering higher revenue collection in recent years, the initial target for the energy and mineral resources division (EMRD) has been raised to Tk 10 billion, which was earlier proposed at Tk 9.3 billion.

Finance officials during the meeting said over 90 percent of the EMRD's revenue comes from the dividends of Petrobangla and Bangladesh Petroleum Corporation (BPC), and stressed the need to ensure regular disbursements of these dividends.

They said the Department of Explosives issues around 65 types of licences, last revised in 2014, which need to be updated. Furthermore, fees should be collected for all services which are not being charged currently.

Thirteen institutions under the EMRD have accumulated arrears totalling Tk 424.97 billion for DSL payments, which should be recovered.

The fluctuation in non-tax revenue collection raises concerns about the government's ability to generate steady income beyond taxes, said economist Dr Mustafa K Mujeri, former executive director at the Bangladesh Institute of Development Studies (BIDS).

He said non-tax revenue increased in certain years while the government arranged auctions for allocating frequency to mobile operators or receiving dividends from the BPC.

However, regular sources of income such as factories and corporations of the government failed to generate significant revenue due to making losses following inefficient operations.

"An escalation in fees will help generate revenues. However, it'd not be wise to increase fees in secondary education. Ensuring efficiency and reducing corruption would be the best solution to boost non-tax revenues," he said.

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