Imposed or efficiently estimated

Theoretically Imposed budgets are prepared from top-down direction, i.e. the Resource Committee sets the high-level budget (often just basic numbers) without collecting detailed information from operating staff. This total general target is then broken down into detailed budget. On the other hand, bottom up or estimated budgets are prepared from bottom-up, i.e. operating staff collects the detailed information from various departments/functions/other sources. Process usually has a budget coordinator – e.g. Finance Division of the Ministry of Finance which aggregates/consolidates these lower-level budgets into the National budget which then is placed before the parliament for approval. Logic and advantages of bottom up budgets are manifold ( 1) bottom staff may be more motivated, if they participated in budget preparation (2) bottom staff is in regular and detailed contact with the budgeted objects, (3) they have better information compared to senior management, and (4) they are more accountable for the implementation.

However, the disadvantages of bottom –up budgeting should not be overlooked. In bottom up budgeting, (1) the lower control over budgets, mainly because operating staff often lacks a complex view and concentrate just on departmental issues, therefore the risk of not meeting the national objectives remain elusive. (2) the risk of poor budgets increases, if operating staff do not have sufficient experience ( 3 ) the process of budget preparation is quite long (4) bottom staff may set too easy target, (5) problems with coordination between departments and departmental budgets need to interrelated (6) though the senior management often adjusts the final aggregated figures anyway. It is then very difficult to explain any variances of such budgets with actuals in the future if these adjustments are not planned into bigger operational detail. The implementation of policies pronounced in the Budget becomes rudimentary for the bottom though they have different concepts, criteria and commitment. The halfhearted 2022-23 budgetary measures regarding whitening ill gotten money laundered outside will create mixed reaction while defining and designing the procedure to be in place.

In Bangladesh national budget is prepared in a manner of go between the top down and bottom up approach. Many experimental initiatives have been practiced during the last five decades and ultimately in last decade it remains at top down echelons.

Both the Supplimentary Budget and Proposed Budget are placed before the Parliament in the first week of June, the last month of the Fiscal Year. According to the legislative rules and procedure, the ‘Supplimentary Budget’ is cleared within a week after it is placed and the ‘Proposed Budget’ is passed by Parliament by June 30 for the ‘assent’ of the Honble President of the Republic. Constitutionally Bangladesh budget is a document that should be recommended by the President for placing before the parliament and finally it must have his assent. In particular, the placing of Supplimentary Budget and its passage has got a very specific provision like ,

“91. If in respect of any financial year it is found – that the amount authorised to be expended for a particular service for the current financial year is insufficient or that a need has arisen for expenditure upon some new service not included in the annual financial statement for that year; or that any money has been spent on a service during a financial year in excess of the amount granted for that service for that year;

the President shall have power to authorise expenditure from the Consolidated Fund whether or not it is charged by or under the Constitution upon that Fund and shall cause to be laid before Parliament a supplementary financial statement setting out the estimated amount of the expenditure or, as the case may be, an excess financial statement setting out the amount of the excess, and the provisions of articles 87 to 90 shall (with the necessary adaptations) apply in relation to those statements as they apply in relation to the annual financial statement.”

And in line with the quoted constitutional spirit, the Rules of Procedure of the Bangladesh Parliament has the provisions like

123. Supplementary, excess and exceptional grants and votes of credit

Supplementary, excess and exceptional grants and votes of credit shall be regulated by the same procedure as is applicable in the case of demands for grants subject to such adaptations, whether by way of modification, addition or omission, as the Speaker may deem necessary or expedient.

124. Scope of discussion on supplementary grants

The debate on the supplementary grants shall be confined to the items constituting the same and no discussion may be raised on the original grants nor policy underlying them save in so far as it may be necessary to explain or illustrate the particular items under discussion.”

Under this guidance nation seldom see any detailed discussion or debate on the Supplementary Budget placed in the parliament. It is cleared by the legislature mostly within next week of its placement. Traditionally in this part of our world Budget are prepared by Ministry of Finance , endorsed by Parliament without significant scrutiny, implemented by different ministries and agencies of the government with not much adherence as it was not proposed by them and again Parliament accept the Supplementary Budget in a smooth way. Budget, apart from an outline of strategic plan and roadmap for development and non development fiscal measures, is a fundamental memorandum of understanding both side between the citizen and the government and both are legally bound to each other for its proper implementation. Both the government and citizens are represented in the Parliament by the elected representatives, so the representatives are highly expected to have active participation in the budget making, passing and overseeing its implementation.

Bangladesh Constitution has a clear condition that “83. No tax shall be levied or collected except by or under the authority of an Act of Parliament.” So parliament must endorse the new or revisions made in the tax policies during the current financial year other than which were passed by the parliament while adopting the Finance Bill of the respective year.

In the proposed budget the revenue collection target is fixed based on the quantum of high sided expenditure outlay in which the share of the National Board of Revenue (NBR) normally imposed more than 70 per cent. During the last couple of years the revenue collection target is presumed ambitious since it is estimated more than 30 per cent higher than that of the current financial year. Tax rates are reduced on demand and pressure, new tax exemptions are awarded to some sectors, minimum taxable income ceiling is kept static for years, tax slabes are raised or revised almost every year to a new level, in this context with not so many new measures, normally, almost in every year NBR to face heavy challenge to achieve a growth of more than 30 per cent. The ratio of contribution from non NBR revenues has been decreased enormously during last few financial year, it is given a soft target too. Non NBR revenues are coming from public sector corporation service organisation and enterprises running commercially. Though more accountability should be ensured in the SoEs financial functionaries, as they have eaten up most of the foreign aid money for their development, they must pay back to the government in terms of SLA repayment, the macroeconomic management policy is not found feasible.

In Bangladesh, effective initiatives are to be taken to make direct tax as the principal source of revenue with a view to ensuring socio-economic development and a society based on equity and justice through removing social disparity. Such initiatives are to be implementable to bring about a principle of equity in overall economic landscape. In the proposed budget, along with enhancing investment and employment opportunities multifarious initiatives have been pronounced to widen tax net. Stocktaking of implementation of initiatives announced earlier FYs are to be evaluated. It may not be perceived as good dividend.

Bangladesh tax system is needed to be a reflection of country’s socio-economic and cultural values rather than the values of the decision maker. To create a system of taxation, a nation must make choices regarding the distribution of the tax burden—who will pay taxes and how much they will pay—and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing the tax system, these choices reflect the type of community that the public wishes to create. In countries where the public does not have a significant amount of influence over the system of taxation, that system may be more of a reflection on the values of those in power to enact law or to enforce collection.

The writer is retired Secretary to the Government and former Chairman of NBR, mazid.muhammad@gmail.com