Internal revenue collection: 2.73pc negative growth in March

The economic downturn due to COVID-19 has severely affected the country's internal revenue collection that posted 2.73-per cent negative growth in March 2020.

During the period under review, the National Board of Revenue (NBR) faced a shortfall of Tk 119.55 billion against its target.

Income tax wing has faced a shortfall of Tk 53.10 billion, VAT Tk 37.51 billion and customs duty Tk 28.93 billion against their targets.

The NBR has faced a revenue collection deficit of Tk 561.38 billion in the first three quarters of this fiscal year, said its provisional data.

However, tax revenue collection registered 7.78-per cent growth from July to March of this fiscal. It was 7.25 per cent in the same period last year, according to an NBR data.

Economists predicted that the revenue collection growth would be from 0.0 to 2.0-3.0 per cent by the end of this fiscal due to the impact of coronavirus on economy.

Policy Research Institute (PRI) executive director Dr Ahsan H Mansur said the NBR might face a Tk 1.15-trillion deficit in revenue collection by this period.

"In an optimistic projection, I've found that the NBR could hardly collect Tk 2.10 trillion in tax revenue in the current fiscal year," he added.

Mr Mansur said the government would lose Tk 150-billion in tax revenue due to the coronavirus consequences.

"If the situation remained normal, the NBR would achieve 7.0-9.0 per cent growth in tax revenue collection while target has been set expecting 45-per cent growth over the corresponding period."

The analyst said the overenthusiastic and unrealistic revenue collection target with shortcomings in structural reform is responsible for a sluggish trend in revenue collection.

Recently, finance ministry has revised the tax revenue collection target at Tk 3.0 trillion, down by Tk 250 billion from the original target.

Centre for Policy Dialogue (CPD) executive director Dr Fahmida Khatun suggested revising the revenue collection target in a realistic way as it is still an ambitious one.

If the government prepares an expenditure plan based on a Tk 3.0-trillion target in revenue earnings, she said, it would cause a grave mismatch on the economic front.

"Budget deficit will go up this year, but we support the deficit if resources are spent on vulnerable group feeding or annual development programme targeting income-generating activities in this situation."

Earlier, the CPD projected a shortfall of Tk 1.0 trillion in tax revenue collection this fiscal.

Dr Khatun said they would revise the projection again in May following corona's impact on economy.

"Revenue shortfall is natural as COVID-19's impact on economy first began in the month of March," she added.

Both direct and indirect tax collection suffered in March for a slowdown in import, closure of business units and limited activities of corporate bodies like banks, Dr Khatun observed.

In the first three quarters of this fiscal, the NBR collected Tk 1.65 trillion in tax revenue against its target for Tk 2.21 trillion.

Last year, the revenue board collected Tk 1.53 trillion in tax revenue during the same period.

Until March, customs wing faced the highest shortfall of Tk 202.60 billion followed by income tax Tk 184 billion and VAT Tk 174.62 billion.

On an average, the NBR has achieved 13.16-per cent growth in revenue collection in the past five years.

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