Saturday, 28 November 2020

Revenue policy of Bangladesh

  

The revenue policy of Bangladesh is the overall philosophy, strategy and management of the revenue and expenditure of the Government of Bangladesh . Its main content is government revenue which has government expenditure on the other side . The continuous reform of revenue policy has a direct impact on creating a productive and employment-oriented economic environment in the country. Among all the responsibilities of the government, formulation and implementation of fair revenue policy is one of the major constitutional responsibilities. The main purpose of formulating revenue policy by the government is to maintain a balance between the revenue and expenditure activities of the government. Balanced revenue policy plays a vital role in maintaining the overall macroeconomic stability of the country and in creating an environment conducive to rapid economic growth. 


The revenue collected by the government in various ways is therefore considered as the income of the government. Government funds are collected from the collection of taxes and non-tax revenue to run the government administration and to implement public welfare programs . 


Under the revenue policy, (a) revenue collection estimates are made, (b) expenditure activities are planned and (c) potential budget deficit funding sources are identified. Fiscal policy focuses on balancing macroeconomic variables by creating investment-friendly and employment-oriented incentives in the economy. Equitable revenue management is important in overall economic management as the government's revenue-expenditure balance as well as fare revenue policy guarantees dependence and continuity on macroeconomic status to other institutions and individuals involved in economic activities .


Government income


The main source of government revenue is the money collected from tax revenue . Basically direct tax and indirect taxThese two types of taxes combine to generate tax revenue and account for more than 80 per cent of the total government revenue from this sector. The remaining revenue is collected from various non-tax revenue collection (fees, charges, etc.). The rate of revenue collection is one of the recognized determinants of determining the level or position of development of a country. The stronger the economy of a country, the higher the rate of revenue collection. In our country, the Gross Domestic Product (GDP) ratio has increased from 6.48 per cent in FY 1999-2000 to 11.3 percent in FY 2007-08. In the financial year 2008-09, the rate decreased slightly to 11.25 percent. It is estimated that this rate will increase to 11.5 percent in the fiscal year 2009-10. This trend of revenue collection shows that the revenue-to-GDP ratio is steadily increasing but the growth rate is low and the pace is slow.



Tax management 

The three main sources of revenue of the Government of Bangladesh are two types of indirect taxes such as import duty and value added tax and two types of direct taxes such as income tax and wealth tax . Besides, excise duty is levied on domestic production of certain products . In addition, supplementary duties are levied at the import stage and at the local production level for the purpose of collecting the required revenue . The National Board of Revenue is an affiliate of the government's internal resources departmentIt is responsible for formulating and implementing tax policy in Bangladesh. To achieve self-sufficiency in food production and ensure food security by giving priority to the agricultural sector as aimed at achieving the social goals stated in the development plan announced by the government in the shortest possible time. Administrative and legal measures are taken every year through the national budget on direct taxes and indirect taxes with a view to liberating the poor people from the vicious cycle of poverty and achieving the Millennium Development Goals .


Revenue collection activities 

Sections / Sectors of Government Expenditure: 1. Defense 2. Maintaining Internal Peace and Order 3. Department of Justice 4. Urbanization Sector etc.



Budget balance and financing 

The national budget is formulated against the backdrop of specific national strategies adopted for economic growth, poverty reduction and social development . But when there is a gap between the revenue and expenditure of the budget due to the limitation of resources, the budget deficit occurs. With about 40 percent of Bangladesh's population living below the poverty line, the government has to take greater measures to transfer wealth and income to the poor at an increasing rate. While this will increase the overall budget deficit somewhat, it will also increase the overall demand in the economy by increasing the purchasing power of a large number of people.Being able to keep the trend going. On the other hand, it is helping a large number of disabled people to maintain a minimum standard of living. However, the trend of budget deficit in Bangladesh shows that the budget deficit is 5 percent or less of GDP, except for a few years of natural disasters. It is a manifestation of the overall revenue management skills of the country. The following table presents the budget balance and financing data for the last decade. This pattern changed in the 2011-12 fiscal year as government expenditure increased significantly compared to revenue collection.



Internal resources for the Annual Development Program 

From the section on the contribution of internal resources to the annual development program, it is seen that on an average about 50 per cent of the resources are being utilized in the annual development program from internal sources . In this case, an analysis of the data from FY 1999-00 to FY 2008-09 shows that less than 40 per cent of the resources of FY 2007-08 alone were utilized from internal sources. It is worth mentioning here that floods and cyclones cider in successionSubsequent foreign aid increased the contribution of foreign aid to the annual development program of that year, while the contribution of domestic sources decreased comparatively. In the fiscal year 2009-10, about 56 per cent of the resources allocated to the main annual development program came from internal sources. Although the size of this year's Annual Development Program is significantly larger than in previous years, the rate of internal resource allocation and total allocation in the Annual Development Program is significantly higher than in previous years. An illustration of the contribution of internal resources to financing can be found.



Government debt 


Loans from foreign sources 

Bangladesh was known as a foreign aid dependent state for almost two decades after it was established as an independent state. However, a recent observation of the flow of resources from foreign sources shows that the amount of grants given to Bangladesh is gradually declining. On the other hand, the amount of borrowing from foreign sources is increasing. However, the tendency of government borrowing from domestic sources has increased significantly compared to foreign sources as a whole. Bangladesh every year with the increase in borrowing by the principal and interest payment of the debt or liabilities Debt Servicing LiabilityGradually increasing. This is reducing the flow of net assets from foreign sources. However, due to increased foreign aid during the years of natural disasters, the inflow of net assets increased at that time. The net flow increases due to additional assistance from foreign sources. The details of interest and principal repayment of foreign loan by Bangladesh are shown in the table below. At present, Bangladesh's government debt is still within tolerable limits. Due to various global changes, the receipt of loans and grants from foreign sources has been steadily declining; Therefore, in addition to foreign loans to meet the budget deficit, the government has undertaken various reforms and promotional programs to mobilize resources from internal sources. Table: Receipt of government loans and grants from foreign sources and actual and interest payment situation. 


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