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Higher growth targets raise questions Staff Correspondent Executive Director of the Centre for Policy Dialogue (CPD) Dr Debapriya Bhattacharya has raised some questions regarding 'extraordinary higher growth targets' in some areas, particularly revenue earning, in the proposed budget for fiscal 2002-03.
According to him, the extraordinary higher growth targets are: 19.57 per cent in total revenue earning, 53.74 per cent in VAT, 35.3 per cent in customs duty, 86.2 per cent in taxes on vehicles, 52.3 per cent in land development tax, 37.4 per cent in stamp (non-judicial) fees, 33.3 per cent in narcotics sector, 78.8 per cent in administrative fees and 33.4 per cent in interest income.
Although the finance minister in his speech on Thursday projected these growth targets, he did not clearly explain how the targets would be achieved, Debapriya said. He was talking to journalists on the proposed budget at the CPD conference room yesterday. The revenue growth target seems 'quite daunting' as the average growth rate of total revenue in the last 12 years was only 10.6 per cent, he said.
"I agree that the revenue income should grow at a faster pace but there should be some effective mechanism for attaining about 20 per cent growth, meaning an additional Tk 5414 crore". On the other hand, the renowned economist said, there are some sectors where extraordinary growth rates were projected but the fiscal measures taken in the sectors are unlikely to support such growth. For example, in customs duty, 35.3 per cent growth rate was projected but the import sector has been stagnant for the last six months and there was no indication in the budget speech how to break the stagnation.
So, from where the projected revenue earning from the sector would come if import does not increase? he asked. Value Added Tax (VAT) is the single most important component in revenue earning under the NBR. Growth in the area was projected to be 53.74 per cent but it was not shown 'how much linkage' would be brought about between indirect and direct tax systems while expanding the VAT network. The economist further said it is also not clear from the finance minister's speech how revenue earning would increase in the non-NBR sectors as projected. The minister only mentioned the revenue growth but failed to show any effective strategy to achieve that, he noted.
The finance minister expects 86 per cent growth in earning from taxes on vehicles but he proposed such steps which would decrease import of bus, truck, minibus and human hauler. Debapriya said a 'high leap in revenue earning' is not possible only through bringing about reforms in tax administration. "It would be wrong to look for a solution in this regard without accelerating the pace of investment in the country." It also needs a massive infrastructure adjustment, he observed.