THE major thrust of any structural adjustment and stabilization pro- • grammes usually falls on the fiscal sector mainly because fiscal deficit tend* to rise when the fiscal sector Is In disarray. Steps were also afoot to streamline Bangfa desh's fiscal front since the days the structural adjust merits and stabilization marked a start. To what extent the various measures undertaken so far yielded the dividends could be in evidence from the Independent Review of Bangladesh Development (IRBD) of the Centre lor Policy Dialogue (CPD). This section on the fiscal sector owes to Dr Omar Halder Chowdhury or the BIDS

Tax Revenues

As far as revenue collection by the government Is concerned, substantial Im prove me nt has been recorded It is reported that 4rom a meagre 8.8 percent of ODP during the 1980s the share of revenues to ODP increased to a little over 11 per cent irt the early 1990^ Both tax and non-tax revenues Showed some Increase ovef the period under comparison. For example, the total tax/GDP ratio, according to the re searcher, hanged around 7.5 per cent during the 1970s and the 1980s which appears to have shot up to 9 per cent during the early 1990s. (ie 1990/91-1993/94). '

Likewise, the total non tax/GDP ratio averaged 2.1 per cent in the early 1990s as compared to the average of 1.3 per cent during the ear Iler periods. The fact how-

ever, remains that notwithstanding the improvement In revenue collection. Bang ladesh still trails far behind the South Asian average total tax/GDP ratio of 12 per cent (India. 16 per cent: Pakistan: 1 1 per cent) and of 18 per cent in 82 developing oiJhtries. . S

5. Direct Taxes C’

It may be recalled that the major screes of Tax rev enues are’direct and Indirect taxes. The former comprises income taxes (indtviduaLMn stltutlonk and agrlcultiW!) and properly taxes (wealth, registration, oon-judlcial stamps etc) whtk* the latter applies mostly to consumable goods and services. Accor ding tothe report, the Share of direct taxes to total tax proceeds rose form 18 per cent in 'toe late 1970s to 23 per cent in the early 1990s The xiajor chunk of the direct tax flows from Income tax of whieh 60 per cent owes to institutions mostly, lew companies Less than one per cent of the people of Bangladesh tends to payt income tax The feeble contribution of the direct tax to total outlays thus seemingly springs from low tax base. ■

The most disconcerting event relates to the land tax revenue which Is reported to

have gradually fallen over time from 10 per cent of total taxes In 1960/70 to only one per cent in early 1990s The same phenomena is also said to be observed in the case of agricultural income tax. It appeal's that unless agricultural income and land taxes give more to the exchequer. the share of direct taxes to the total revenue collection can hardly be ex petted to show any upward

movement of an appreciable order.

Indirect Taxes

Indirect taxes account for more than three-fourths of the total tax collection by the government and mainly springs from two sources: taxes an domestic goods and services and taxes on international godds. The advent of the VAT in 1991. which* is imposed en imports and manufacturing stage, gave a further fillip to the revenue ’ augmentation by replacing

the age oid arduous sales and excise taxes. According to the report International transaction of goods (mostly import duties) oontributes the largest segment of the total tax revenue, import tfu ties contributed 56 per "cant in the late 1970s and conttn ued to share hAfte the total tax collection in the .early 199Os During the same pe nod of time tax eg or domestically produgfed goods and

services compiled onefourth of the total tax outlays while VAT (In early 1990s) provided 28 fwr cent.

Sponsored Self Reliance?

Seemingly appears that Bangladesh Is caught y a paradox. Domestic resource' mobilization Is au gigex of self-reliance but th*, tax structure is heavily titled to-j wards import duties And’ given that 60 per cent of the

Ffrnports are financed by foreign assistance one can. possibly. argue that qur self ro-

liaoce is a function of import and aM inflows So long a dent caw t be made in generating more tax amt non tax revenues from other non-im port sources, the Mgl reliance would have to Ite con tinued to be sponsored by the donors.

. (iover—iint

W Expenditure

TW share of governmental expenditure to GDP, reflects the contribution .of governmental activitiq*«| national development TotA govern meat expenditure averftgwj a little over 15 per cent of CDF during the 1970s add the 1980s which sharetf a Marginal rise to IS per rent in earM199Os However the Ah are W revenue expenditure to GDP accounted for abAul 9 per c* in early 1990s as ompared to 8.4 per cent ftr the mid 1980s a»d 6.3 per Wt kg 1975/76 197 9/80 "Wrfod. On the otherhfind. the development expenditure shared a miserable downturn trenif: 8 9 per cent in 1975-78-1979-80. 7.5 per cent in P985/86 1989-W and 7.2 per cent tn 19W/91 1993 •4

An th|s context go few ob-se^tions pertaining 10 the composition of ®>verrl>erHal revenue and eilptndlture share^ be tn order TWrevt

enue budget continues some elements of developmental nature while the develop ment budget, at the same time, also embraces some expenses which could be turned as revenue outlays In the case of revenue budget, the development expenses constitutes barely 4 per cent which in the ca»e of devel opnienr budget the share of revenue Component comprised aboW one ttaird during the late 1970s and then increased to stay at 37 per cent in early 1990s. This could be abductei^to the reason that a number if foreign aided pro jects retire a handsome amount to be earmarked far repairing and maintenance.

The domestic resource iiiiponent in Annual '■ velopment Plan (ADP) is considered as an index of self reHance by the government AccordirgHp the study by Dr Omar H Gbowdhury. this in deli «f seif reliance was 22 per cent during the period 197f/7fi >79 &. ab*t 28 per cent during 19M 82 19g4-AV about only 6 per Am muring 19gft/86 1989/® and 2T per dent during ghe early 1990s.

1988/89 and 19R9/1AK the index appeared negative 4p>plyg|g that not toe ADP, tout also the'rW-♦nug expenditure was fl . nanced ty foreign aid. T^e doomsday seems to be over and Bteigtadesh should con" tfnue w. yven ap^t^riate environnadnt. finance in-vea«ng amount of develop niental otftteys from own rVitrcei uid thus m«ve to-

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