Bangladesh Studies
Bangladesh Studies
  • Home
  • Bangladesh
    • Foreword
    • Acknowledgements
    • Preface
  • Country Profile
    • Country
    • Geography
    • Society
    • Economy
    • Transportation and Communications
    • Government and Politics
    • National Security
  • Introduction
    • bangladesh studies>
      • Chapter 1 - Historical Setting >
        • EARLY HISTORY, 1000 B.C.-A.D. 1202
        • Islamization of Bengal, 1202-1757
        • European Colonization, 1757-1857>
          • Early Settlements
          • The British Raj
        • Pakistan Period , 1947-71>
          • Transition to Nationhood, 1947-58
          • The "Revolution" of Ayub Khan, 1958-66
          • Emerging Discontent, 1966-70
          • The War for Bangladeshi Independence, 1971
        • Birth of Bangladesh>
          • Early Independence Period, 1971-72
          • Fall of the Bangabandhu, 1972-75
          • Restoration of Military Rule, 1975-77
          • The Zia Regime and Its Aftermath, 1977-82
      • Chapter 2 - The Society and Its Environment>
        • Geography>
          • The Land
          • Climate
          • River Systems
        • Population>
          • Population Structure and Settlement Patterns
          • Migration
          • Population Control
        • Social System >
          • Transition to a New Social Order
          • Rural Society
          • Urban Society
          • Women's Role in Society
          • Social Classes and Stratification
        • Religion>
          • Islam
          • Hinduism
          • Buddhism
          • Christianity
        • Education>
          • The British Legacy
          • Education System
          • Religious Education
          • Education Planning and Policy
        • Health>
          • Disease and Disease Control
          • Health Care Facilities
          • Medical Education and Training
      • Chapter 3. The Economy>
        • Economic Context >
          • Historical Perspective
          • Economic Reconstruction after Independence
        • Managing the Economy>
          • Economic Policy and Planning
          • Government Budget Process>
            • Revenue Budget
            • Development Budget
        • Joint Ventures and Foreign Investment
        • Money and Banking>
          • Currency Fluctuation
          • The Banking System
        • Foreign Assistance >
          • Test Case for Development
          • Aid Dependence>
            • International Banks
            • United Nations
            • Foreign Governments and Private Donors
        • Agriculture>
          • Structure of Agricultural Production
          • Food Crops
          • Industrial Crops
        • Industry>
          • Traditional Sectors
          • Ready-made Garments
          • Other Industries
          • Mineral Development
          • Technological Advances
        • Foreign Trade >
          • Export Sectors
          • Balance and Terms of Trade
        • Transportation and Communications>
          • Inland Waterways and Ports
          • Road Transportation
          • Railroads
          • Civil Aviation
          • Telecommunications
          • Tourism
        • Problems and Prospects
      • Chapter 4 - Government and Politics>
        • Structure of Government>
          • Constitution
          • Legislature
          • Executive>
            • Presidency
            • Council of Ministers
          • Judiciary
          • Civil Service
          • Local Administration
        • The Ershad Period>
          • Achieving Stability, 1982-83
          • Emerging Opposition, 1983-86
          • Relaxation of Martial Law, 1986-87
          • More Opposition Pressure
        • Political Dynamics >
          • Local Elites
          • The National Party
          • Party Politics>
            • Awami League
            • Bangladesh National Party
            • Islamic Parties
            • Alliances
            • Workers and Students
            • Women in Politics
        • The Media
        • Foreign Policy >
          • South and Southeast Asia>
            • India
            • Pakistan
            • Other Nations
          • China and Other Asian Nations
          • The Islamic World
          • The Superpowers>
            • United States
            • Soviet Union
          • Western Europe, Canada, Australia, and New Zealand
          • International Organizations
      • Chapter 5 - National Security>
        • Armed Forces and Society>
          • Colonial Origins
          • Pakistan Era
          • The Liberation War
          • Postindependence Period
        • Organization of the Armed Forces>
          • Legal Basis
          • Recruitment
          • Mission>
            • National Defense
            • Intelligence and Security
          • Security Environment
          • Defense Spending
          • Foreign Acquisitions and Ties
        • The Three Services>
          • Army
          • Navy
          • Air Force
        • Auxiliary Forces >
          • Bangladesh Rifles
          • Ansars
          • Police
          • Village Defence Party
        • Public Order and Internal Security>
          • Violence and Crime
          • Insurgency in the Chittagong Hills
          • Criminal Justice
          • The Military in the Late 1980's
  • Bibliography
  • Glossary
  • About us
  • Contract us
Government Budget Process

Revenue Budget

The annual budget is prepared by the Ministry of Finance and presented to Parliament for approval each year, except during periods of martial law, when the budget has been announced by the martial law administration. It is divided into a revenue budget and a development budget, on both the receipts and the expenditures sides.

The revenue budget pays for the normal functioning of the government and is intended to be fully financed from domestically generated sources. The fiscal year (FY--see Glossary) 1988 revenue budget was based on anticipated receipts of about US$1.6 billion, or approximately Tk48.9 billion (for value of the taka--see Glossary). Expenditures were to be US$1.5 billion, leaving a surplus of US$130 million for development. The previous year a revenue surplus of US$246 million was applied to the development budget.

Tax revenues, almost half of them from customs duties, accounted for about 80 percent of revenue receipts. Excise duties and sales taxes also were important, each producing more revenue than taxes on income, which yielded only about US$150 million according to the revised budget in FY 1985. That amount represented less than US$2 per capita income tax. The largest part of the nontax revenue--making up 20 percent of the revenue budget in the late 1980s--came from the nationalized sector of the economy, including industrial enterprises, banks, and insurance companies.

Even by the standards of developing countries, Bangladesh's ratio of taxes to GDP, and of direct tax revenue to total tax revenue, was very low. In 1984 taxes amounted to only 8.1 percent of GDP, just half the percentage for India, less than half the average for 82 other developing countries, and far below the average of 29.7 percent for the developed countries. Similarly, the 20.1 percent of tax revenue coming from direct taxation was one of the lowest in the world (the average for developing countries was 29.3 percent, for industrialized countries 34.2 percent). Most of the population was exempted from direct taxation because its income fell below the poverty line; the cost of collection probably would have exceeded the revenue potential. For higher incomes, the system provided incentives for savings and investment, rather than seeking to maximize tax revenue. The central government operated on revenue of less than US$20 per person.

The expenditures side of the revenue budget put the largest single block of funds into education, totaling 17.3 percent of the FY 1988 budget. Defense spending took 17.2 percent of the budget; if expenditures for paramilitary forces and the police are added to the portion for defense, the figure rises to nearly 23.8 percent of the budget (see Defense Spending , ch. 5). Debt service, general administration, and health, population, and social planning each accounted for about 20 percent of expenditures.

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