Sustainable measures should be taken to increase revenue

Dr. SM Jahangir Alam :

In order to achieve the Sustainable Development Goals by 2030, all participating countries should focus on specific areas.

Among these important issues are the financial and non-financial sectors, the public-private sector and bringing about dynamics in the management of domestic and international resources.

The financial sectors include internal taxation, foreign direct investment (FDI), official development assistance (ODA), prevention of money laundering etc.

Non-monetary assets on the other hand include ensuring domestic policy framework, effective institutions and efficient administration, democracy, rule of law, human rights, transparency and accountability.

On the one hand, developing countries are constantly struggling to achieve resource efficiency and mobility; On the other hand, along with providing government financial support, the developed countries are promising to provide various supports to the developing countries to bring them on the path of sustainable development.

The purpose of SDG-17 is to make these activities stronger and more realistic.

In the last two decades since 1990, tax revenue has risen from 18 percent to 21 percent of total GDP as a result of significant increases in income taxes and value-added taxes in low-income countries.

Almost the same trend is observed in upper middle income countries. Yet poor and needy countries continue to fall short of the domestic revenue needed to implement the development agenda.

Many of the lowest revenue-to-GDP countries, particularly those that still house the world’s largest populations of ultra-poor people such as Bangladesh, India and Nigeria, still have tax-revenue rates below 15 percent of GDP.

Low and middle income countries (LMICS), especially low-income countries, rely on international or foreign financing to finance their development agenda.

However, in 2013, only six donor countries included in the Organization of Economic Cooperation and Development (OECD) were able to fulfill the conditions of the United Nations long-term goal of spending 0.7 percent of the gross national income as official development assistance.

Most of the countries have not achieved the target of providing the promised development assistance. Total net official development assistance (ODA) in 2015 was US$ 131.6 billion. Out of this huge sum, only 37.3 billion dollars went to LDCs.

Achieving the SDG targets on various indicators would require around 5 to 11 trillion in annual aid. Compared to that, the aid received from rich countries is very less – less than 1 percent. SDG-17 seeks to change the situation.

The main tone of this objective is: to increase the dynamics of domestic and foreign resource management of developing countries, to make long-term debt management sustainable through integrated policies and procedures, and to highlight the implementation and strengthening of the procedures to reach sustainable development goals by adopting and implementing various policies to increase investment.

Overall, achieved in various fields SDG-17 also places special emphasis on global partnerships to achieve sustainable development through the sharing of experience, technology and financial resources.

Recently, the General Economics Division of the Planning Commission has estimated the total cost of implementing the SDGs at constant prices for 2015-16 at USD 928.48 billion.

For the period 2017-2030, the implementation of SDGs will require an annual expenditure of about 66.32 billion dollars from various domestic and foreign sources. As a source of funding to meet the deficit of this large amount of resources, private sector will contribute 42.09 percent, public sector 35.50 percent, public-private partnership 5.59 percent, foreign financing 14.89 percent and various NGO organizations will contribute 3.39 percent.

has been estimated. Effective implementation of the SDGs in line with the global goals and targets involving all stakeholders has already begun.

The Government is determined to significantly advance current progress in national and international resource management to achieve the Sustainable Development Goals by 2030.
A major sector of national revenue in Bangladesh is tax revenue. The amount of revenue collection from this sector is about 85 percent of the total revenue.

Bangladesh’s tax-GDP ratio is approximately 10 percent compared to other countries of the same level. Which is the lowest so far?

This is mainly due to narrow tax base, huge amount of tax evasion and administrative inefficiency. Bangladesh’s Low Tax-Effort Index currently stands at 0.493 (BBS, 2012), which suggests that the country’s revenue collection capacity is still inefficient.

Further modernization of the National Board of Revenue (NBR) including institutional and legal restructuring is required to improve the current revenue collection capacity. Currently only 21 percent or 33 lakh people pay income tax.

In order to increase the number of taxpayers and increase revenue, all citizens who have national identity cards should be forced to file income-expenditure accounts. Retention of TIN system for corporations will increase the number of taxpayers and increase the revenue collection.

Adequate inflows of foreign resources, including official financial assistance (ODA), foreign direct investment (FDI) and remittance, are critical to the financing and implementation of the Sustainable Development Goals.

Till recent times there has been considerable progress in the efficient management of financial resources coming from the foreign sector, but it has not been sufficient to achieve the desired goals.

Significant growth in official development assistance was estimated at 14.2 percent during the period 2010-2014, though it declined to 11.2 percent in the next two years, i.e. 2015-17.

In 2010, the amount of government financial assistance was 1777 million US dollars. In 2017, its amount increased to 3677.3 million US dollars. Foreign direct investment in 2017 was 2454.8 billion US dollars as against 913 million US dollars in 2010.

For the implementation of SDG activities in Bangladesh, the Economic Relations Department (ERD) has adopted a number of institutional policies and plans to ensure the necessary resource allocation and the management of development advice and assistance from various sources.

This department has increased communication and cooperation and mutual relations with the responsible ministries or departments of different countries for the purpose of efficient management of resources and collection of funds for project implementation.

The Department of Economic Relations has already prepared the ‘National Resource Development and Project Implementation’ (NPDC) to ensure the required development assistance.

Alongside these efforts are active participation in High-Level Political Forums (HLPFs) and national reviews of progress and challenges in achieving the Sustainable Development Goals by 2030, the High-Level Meeting on Global Partnerships for Effective Development Assistance (High-Level Meeting-HLM-2).

Bangladesh was elected as the Vice-Chair of the Global Partnership for Effective Development Assistance (GPEDC) at the High Level Meeting (HLM-II) in December 2017, which is one of the most important steps taken towards the development of the Global Partnership.

Besides regular local level consultation meetings, launch of online service portal ‘Aid Information Management System’, strategic transformation of money flow through comprehensive public financing and debt management plan and efficient management of foreign assets, Bangladesh Development Forum (BDF) was organized in January 2018. But sustainable steps must be taken to raise revenue.

(Author: Bir Muktijoddha, Former Tax Commissioner and Director-Bangladesh Satellite Co. Ltd.)