The government should formulate the budget for fiscal 2022-23, focusing on how to keep rising inflation in check with less emphasis on GDP growth. For that, subsidies on gas, electricity and agriculture must go on.
But the amount of revenue we are collecting now is not enough to continue subsidies and bear other expenditures. And, it is not possible to boost revenue mobilisation overnight. So, the government has to rely on alternative sources to meet additional expenses. Nevertheless, there is no denying the fact that we have to continue our emphasis on increasing revenue.
The National Board of Revenue, which plays a key role in mobilising revenue, is riddled with a lot of issues, mainly both in VAT and customs. First, we have to detect the problems that have got in the way of revenue growth. Only rhetoric cannot increase revenue collection.
In a meeting with the finance minister, I proposed forming a tax commission with a tenure of six months or a year, which will work on removing all barriers to satisfactory revenue mobilisation.
Those having expertise in revenue should be given the responsibility of the tax commission. If the government works according to what the commission will recommend, revenue collection can be multiplied.
The government has already decided that it will continue subsidies in the forthcoming budget. The allocation for social safety programmes is increasing. There is also an initiative to hike power tariffs, but I do not think that the government will be able to do that at this moment, given the present situation.
We can reduce costs by making reforms in the power sector where there is a lot of corruption and waste and then, we do not need to raise electricity prices. What is the point in keeping rental power plants in operation with surplus electricity causing Bangladesh to make capacity payments for idle plants?
Mahbub Ahmed, former senior secretary of the Finance Division