Pragmatic budget policies can help NBR to earn more

Staff Correspondent

7 May, 2021 12:00 AM printer

Pragmatic policies adopted in the national budget can achieve a lot for revenue generation, which are immensely important for driving the economy forward, insider said.

While many businesses struggled during the pandemic, some have done a remarkable job in earning the government important revenue.

The real estate sector and some other sectors have contributed a lot to support the government revenue generation and these sector might help to additional revenue collection through proper budgetary policies.

Recession began in the real estate sector in 2012 with companies struggling to find buyers even after dropping prices, insider said.

The situation got better in 2016, but the crisis didn’t end. In the mid-2018 the government announced housing loan for government officials at 5 percent interest, which provided the sector with a much needed stimulus.

However, consumers began to miss installments payments and construction works got stalled as the Covid-19 pandemic hit the economy.

But the situation in real estate recovered from this rapidly when the budget allowed for investment of undisclosed money into the real estate. Sales of flats increased and pulled businesses out of the recession.

Leading companies credited this development to allowing investment of undisclosed money. It was one of the decisive policies that helped the sector recover, even during an ongoing pandemic, the government earned Tk 10 billion in revenue from this investment.

Besides, the cigarette sector is the largest source of internal revenue for the government, with government getting as much as 81 percent tax from retail prices. In the last 5 years, prices of cigarettes have nearly doubled. NBR data shows that the cigarette sector is likely to generate Tk 295 billion revenue in this fiscal year. This is a whopping 13 per cent increase from last year’s revenue of Tk 265 billion.

It is all down to the NBR’s fixation of cigarette price in all segments in line with the prevailing inflation rate last year.

“The pricing policy for cigarettes last year was right and contributed to government earning more revenue,” said Dr. Ahasan H Mansur, the Executive Director of Policy Research Institute.

Imposing higher retail price on cigarette results in higher volumes of illegal cigarettes being in the market, according to market insider.

A 30 percent price hike of low-tier cigarettes in 2018-19 cost government approximately Tk 25 billion-30 billion in revenue, according to NBR data.


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