Non-tax income must be paid to the state treasury on the date of collection

The Ministry of Finance says the move is aimed at curbing corruption and ensuring timely revenue collection

The Ministry of Finance has introduced a new rule that all non-tax revenues and NBR revenues collected by government agencies must be deposited in the state treasury on the same day they are received.

The move, aimed at curbing corruption and ensuring timely revenue collection, was announced in a Finance Department circular issued yesterday.

The Ministry of Finance has instructed that any income earned after working hours or on holidays must be deposited in the state treasury the next day. Delay in depositing collected income without just cause will result in action, the ministry said.

Besides, ministries, departments, offices and agencies have been directed to increase fees and charges for various government services every three years.

Experts welcome this move

Experts said the new initiative will effectively play a role in curbing irregularities reported in the collection of non-tax revenues and NBR.

Mahbub Ahmed, former finance secretary, told TBS that the possibility of increasing revenues from sources outside the National Board of Revenue (NBR) has long been discussed.

“In many areas, rates or service charges are minimal, although there are also shortcomings in various sectors,” he said.

Masrur Reaz, chairman of Policy Exchange Bangladesh, noted that the economy has grown and diversified with more government services, which has led to new activities and the expansion of greater income.

“In many cases, service fees or fees were established many years ago,” he said, suggesting that instead of updating fees every three years, they could be reviewed and adjusted annually.

The government hopes to increase revenue collection

The Finance Department circular states that there is potential to increase revenue from non-tax sources and NBR. To achieve this, appropriate targets should be set for additional tax collection from non-tax and non-NBR sectors, including imposition of reasonable levies and taxes, precise identification of relevant sectors and regular collection of interest and dividends due from the government.

It also states that the directive aims to ensure the proper distribution, collection and management of resources.

A senior official from the Finance Department suggested that all agencies must judiciously determine taxes and service charges. “Many agencies are proposing to increase taxes or service fees, but there is no clear explanation as to why they are doing so. They only claim that they have not increased for many years, which is not a convincing argument,” he said.

“The government is not there to make a profit; rather, service charges will be cost-based,” the official noted.

In the state budget for fiscal year 2024-25, the government has set a target of collecting Tk 15,000 crore from non-NBR taxes and Tk 46,000 crore from non-tax revenues.

Revenue collection in the country is much lower, forcing the government to borrow from both domestic and foreign sources to cover the budget deficit.

One of the conditions of the International Monetary Fund (IMF) loan is to increase revenue collection.

Finance Division officials informed about various issues related to collection of non-tax and non-NBR revenues and their deposit in government accounts. Many institutions have not deposited funds for years, and some instead spend the money they collect, they say.

“From now on, these issues will also be monitored on an ongoing basis. Meanwhile, the Ministry of Finance will create a database of fees and charges for government services, the official said.

Non-tax income and non-NBR income

Non-tax revenues include interest on loans granted to local governments, state-owned enterprises and government employees. Additionally, it includes various administrative fees, the government’s share of net profits from autonomous, semi-autonomous and statutory bodies, corporations and state-owned companies.

Revenues generated from government services and products, lease or rental of government lands, mines and other natural resources, royalties on the use of government-owned natural resources, tolls levied on roads and bridges, fines and surplus funds from various institutions must be deposited in the state treasury as non-tax revenues.

On the other hand, non-NBR revenues include taxes such as land use tax, drug and alcohol levies, road tax, stamp duty, court fees and motor vehicle taxes, among others.

Target revenues from various sectors

As per the information in the budget report for the current financial year, the government expects to collect Tk 500 crore from drug and alcohol tax, Tk 1,500 crore from motor vehicle tax, Tk 2,250 crore from land development tax, Tk 10,000 crore from land development tax real estate stamp sale (out-of-court) and Tk 750 crore of subsidies, including subsidies for health development, environmental safety and IT development, as non-NBR revenues.

Besides, the government expects to collect Tk 7,676 crore from dividends and profits, Tk 6,114 crore from interest, Tk 5,802 crore from administrative fees, Tk 643 crore from fines, penalties and forfeiture, Tk 9,126 crore from service charges, Tk 726 crore from rents and leases, Tk 1,915 crore from tolls, Tk 3,460 crore from non-commercial sales, Tk 105 crore from capital receipts and Tk 10,433 crore from other sectors as non-tax revenue.