6 years ago

Govt's non-tax revenue earnings on the slide

Target revised downward by Tk 43b in FY ‘18

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The government's non-tax revenue (NTR) earning, which mostly includes resources mobilised from dividend, profit and fees by various departments, has been much below the expectation.

Implementation of the National Pay Scale (NPS) 2015 and low profit-making trend of many government organisations are believed to be the main reasons behind the underperformance.

Following the poor turnover, the government had revised its NTR earning target downward by nearly Tk 43 billion in the last fiscal year (FY), 2017-18.

According to the government documents, the share of NTR in the total revenue earning has been declining fast, although it is a key source of revenue.

The contribution of NTR in the total revenue dropped by nearly 6.0 percentage point in four years, ending in FY 17.

Its shares in terms of the country's gross domestic product (GDP) also dropped by 0.06 percentage point during the period.

NTR's annual growth also fell by nearly 7.0 percentage point from FY 14 to FY 17.

Economists have opined that the government enterprises are not efficient enough, which is leading to the NTR underperformance.

They also expressed the view that this important source of revenue mobilisation should be made vibrant, considering its role in diversifying the resource mobilisation.

Professor Dr M A Taslim of the Department of Economics at the University of Dhaka told the FE that the earnings of many government departments, like the post office, are very low.

He, however, opined that the railway department could have fetched higher revenue by improving its services.

"Only by raising the frequency of trains on Dhaka-Narayanganj route it can improve revenue earning," he added.

Dr Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), told the FE that most of the state-owned enterprises are sick, and they lack efficiency.

He said the government's revenue mobilisation needs to be diversified, and NTR is an important source to this end.

Dr Rahman said the government may revise the rates of its different services by improving their quality.

He, however, noted that it will be a challenge to raise more revenue from the state-owned enterprises (SoEs), as many of them might not perform well immediately.

On the other hand, the Finance Division officials told the FE that a number of the government organisations cannot contribute profit (to the public exchequer), as their profit has shrunk following implementation of the National Pay Scale.

"Even some government organisations have taken loan from the Debt Service Liability Department," said an official at the Finance Division's Non-Tax Revenue (NTR) Wing.

He also said the government earlier received a substantial amount of revenue from the Department of Immigration and Passports following issuance of machine readable passports, which has significantly declined now.

The government is also getting lower revenue from the Bangladesh Bank (BB), as its contribution to the public exchequer has dropped by around Tk 10 billion.

The BB mostly earns from the seigniorage, a difference between the value of money and the cost of producing it.

But the central bank's 'sterilised intervention' has cut its profitability.

Sterilised intervention is a macroeconomic process, which means the purchase or sale of foreign currency by a central bank to influence the exchange value of the domestic currency, without changing the monetary base.

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