infograph_non-tax-revenue

Govt eyes non-tax revenue boost thru’ fee hike

Analysts sceptical about expected improvement in the quality of services these institutions provide

The government has planned to increase non-tax revenue collection in the forthcoming fiscal year, which may result in additional costs for citizens to avail of certain government services.

However, analysts are sceptical about an expected improvement in the quality of services these institutions provide. They are also doubtful about the success of the initiative to increase revenue collection by keeping the loss-making government commercial entities in operation.

According to sources from the finance ministry, the government eyes Tk46,000 crore in revenue from this sector in the forthcoming fiscal year 2023-24.

In the original budget for the current FY23, the government had set a target to collect Tk45,000 crore from the non-tax revenue sector. The target, however, has been reduced to Tk40,000 crore in the revised budget.

Sources said the finance ministry has already instructed various agencies to increase revenue collection and the agencies concerned also are chalking out initiatives accordingly.

The Immigration and Passport Department, for example, has projected a two-fold increase in revenue in the next fiscal year compared to the current year. The department aims to collect Tk2,653 crore in the next fiscal year while its revenue collection target for the current fiscal is Tk1,335 crore.

Asked about this, Israt Choudhury, additional secretary of the Ministry of Home Affairs, told The Business Standard that even though the validity period of their passports has not expired yet, many people are applying to obtain new passports since the launch of e-passports.

The number of passport applications has increased from both home and abroad, and it is expected that revenue collection for the Passport Department will double in the coming fiscal year, she said.

Meanwhile, on 28 February this year, during a trilateral meeting on the upcoming national budget, the Ministry of Finance instructed the subordinate or affiliated offices of the Ministry of Shipping to revise their service fees.

Following this, the shipping ministry sent letters to the Department of Shipping, Bangladesh Marine Academy, the National Maritime Institute, and the Directorate of Seamen and Emigration Welfare with instructions to revise various fees.

An official of the shipping ministry informed TBS that the offices concerned had already proposed new fees and sent them to the ministry. A meeting will now be held with representatives of these offices to finalise the proposed fees and inform the finance ministry accordingly.

Likewise, the commerce ministry is set to increase the service fees for 34 types of services of the Registrar of Joint Stock Companies and Firms (RJSC). The ministry has already held a meeting on this matter and drafted a new service fee structure.

Sources told TBS that the decision to increase revenue collection by expanding non-tax revenue sources has been made to meet the International Monetary Fund’s (IMF) condition to avail of a $4.7 billion loan.

According to the IMF, the government’s revenue was less in the last fiscal year owing to a negative growth in non-tax revenue.

In FY22, the government earned almost Tk36,000 crore taka from this sector, down from  Tk58,862 crore a year ago. However, during FY21, an additional Tk16,000 crore of liquidity from various national institutions was deposited in the government treasury.

Even though the government aims at collecting Tk46,000 crore from this sector in the next fiscal year, the IMF thinks that the government will not be able to collect this amount.

The organisation has predicted in a publication related to loans to Bangladesh that the government may earn Tk44,500 crore in non-tax revenue in the upcoming fiscal year.

The Department of Shipping charges fees for 58 types of services, including certification and renewal of eligibility for seafaring, fishing, and coastal vessels’ workers. In FY22, the department collected Tk39 crore in revenue.

The National Maritime Institute and Maritime Academy generate revenue from various courses.

The Directorate of Seamen and Emigration Welfare earns revenue by providing temporary accommodation for sailors, cadets, and naval employees.

The Bangladesh Standards and Testing Institute (BSTI), under the industries ministry, has doubled the fees for chemical testing of 32 types of products.

In FY22, BSTI earned Tk139 crore. The organisation aims to earn Tk145 crore in the next fiscal year.

The prices of products and services provided by the state-owned corporations under this ministry, such as the Sugar and Food Industries Corporation and Bangladesh Chemical Industries Corporation, also are expected to increase.

The Office of the Chief Controller of Imports and Exports, under the Ministry of Commerce, has imposed new fees in several areas, in addition to increasing the fees for import and export permits and licences.

The Ministry of Railways, the Ministry of Civil Aviation and Tourism, the Ministry of Water Resources, the Ministry of Land, the Ministry of Food, and the Ministry of Local Government have been instructed by the Ministry of Finance to submit plans to increase non-tax revenue collection.

‘Fee hike without improving service quality won’t be justified’

Ahsan H Mansur, executive director of the Policy Research Institute (PRI), told TBS that an increase in non-tax revenue will be good for the economy.

“However, in our country, the sectors from which such revenue comes are less likely to boost revenue.¬† This is because most of the government’s commercial ventures are loss-making. And the major causes of losses are irregularity, inefficiency, and lack of good governance.”

Besides, the chances to increase revenue from institutions that are not commercial are also slim, he observed, adding that if it is done, the cost burden will be imposed on the common people, in which case, initiatives should be taken to increase the service quality of the institutions.

Increasing fees without increasing the quality of services will not be justified, he noted, adding that there have been some good road bridges in recent times, on which the toll can be increased.

Major sources of non-tax revenue

Profits made by government-owned banks, insurance, non-bank financial institutions, parks, and zoos are one of the main sources of the government’s non-tax revenue.

Interest income from loans provided by the government to various financial and autonomous institutions and earnings from the tourism and travel services provided by government institutions are also sources of non-tax revenue.

Revenue from registration schemes for companies and imports, cooperative societies, and renewal schemes is also considered non-tax revenue. Administrative fees from various government institutions, tolls on various bridges, visa fees, passport fees, income from telecommunications and postal services, utilities, water resources, and forestry and transportation accounts are also considered non-tax revenue.

The government earns revenue also through renting and leasing government property. Royalties and licence fees for the telecommunications, mining, and energy industries are also sources of non-tax revenue.

In addition, the government collects non-tax revenue through fines, penalties, and confiscations.

 

Source: The Business Standard

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