Hassle-free service, timely fee adjustment key to boosting non-tax revenue

Dividends from state-owned enterprises serve as a significant source of non-tax revenue for the government. However, many of these financial and non-financial institutions in Bangladesh are incurring losses due to inefficiency, mismanagement, irregularities, and a lack of accountability. Conversely, to support the loss-making institutions, capital assistance and subsidies need to be allocated to them from the budget. As a result, the expected revenue from these institutions remains elusive.

The Bangladesh Bank stands out as the only entity consistently providing substantial dividends to the government. However, dividends from other financial institutions are not notably significant in comparison.

Sonali, Janata, Agrani, and Rupali Bank are grappling with a capital shortage. Moreover, these banks are providing capital to struggling companies, such as Padma Bank in the private sector. If such policies persist and issues of inefficiency and irregularities remain unaddressed, the revenue generated from commercial enterprises will likely not see an increase.

The government also garners non-tax revenue through fees imposed on various services. However, these fees are established without adhering to a specific formula or mechanism, sometimes leading to public backlash when they are perceived as excessive. 

For instance, business owners have been calling for a reduction in land and flat registration fees for quite some time now and the government is often compelled to make decisions in response to these types of public demands. Therefore, it is necessary to periodically adjust these fees according to a predetermined formula.

Additionally, non-tax revenue collection is dwindling due to instances of corruption and mismanagement in the service-providing institutions. There are allegations of various forms of harassment against applicants at the passport office. A similar scenario prevails in numerous other government institutions, including the Bangladesh Road Transport Authority. 

If these services could be delivered to citizens fairly, without any form of harassment, then even if the service fees were increased, people would be willing to accept them.

There is potential for boosting non-tax revenue collection in Bangladesh and for that, it is imperative to enhance the capacity of state commercial institutions and improve management by eliminating irregularities. Likewise, measures should be taken to guarantee that public services are provided without any form of harassment.

Author: Zahid Hussain, former lead economist, World Bank's Dhaka office