July-Jan revenue shortfall Tk 148b

Government's tax-revenue collection suffered about a Tk 148-billion shortfall until January of this fiscal year against its target mainly for slow-paced reform to expand the tax net, sources said.

Officials said such large amount of shortfall in the first seven months of the FY 2017-18 would make it difficult for the National Board of Revenue (NBR) to achieve the "ambitious" target.

Despite an impressive import growth, all of the three NBR wings -- income tax, customs and value-added tax (VAT) -- failed to meet their respective target in the July-January period.

However, compared to the previous corresponding period, the NBR achieved 15.37 per cent growth in revenue collection, while the current target has been set expecting around 35 percent growth.

The NBR is lagging behind target this year on revenue-collection growth compared to the same period last year.

Last year, revenue growth was 19.78 per in July-January period.

However, average revenue-collection growth was 14.28 billion in the last five financial years.

The tax authority collected Tk 1.10 trillion in tax revenue in the first seven months of FY 2017-18 against its target set at Tk 1.25 trillion for the period.

A senior NBR official said the aggregate target of the NBR was focused on a new VAT law that the government failed to push through for opposition from businesses and deferred it for two years.

Through implementation of the new VAT law from the current FY, the government had expected around Tk 200 billion in additional revenue.

Dr Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI), said there would be 12 to 15 per cent deficit in the aggregate revenue collection this fiscal.

"There would be around 20 per cent growth in tax-revenue collection by end of this FY while the government set the target expecting 35 per cent growth," he said.

Income tax and VAT are the main sources of tax revenue where supporting reform initiative is absent, he noted.

The revenue collection is being carried out in traditional system for lack of effective reform measures, the economist said.

"Economic activity, domestic demand for consumer products and import growth are impressive, but those indicators hardly bring any significant impact on tax-revenue collection," he said.

According to Bangladesh Bank (BB) data, import settlement grew by 28 per cent in the last one year (January 17 to January 18).

Dr Mansur said import growth helped the NBR to achieve higher growth in customs revenue.

In the July-January period, import and export revenue grew highest by 17. 27 per cent followed by VAT at local stage 16.01 per cent and income tax 12.59 per cent.

The Customs collected Tk 352.97 billion in the first seven months against its target of Tk 376.63 billion.

The NBR collected Tk 424.18 billion worth of VAT in July-January period against its target for Tk 489.02 billion.

Income-and travel-tax collection amounted to Tk 327.94 billion in that period against Tk 387.48 billion.

The government has set an aggregate target of collecting Tk 2.48 trillion for FY 2017-18.

Officials said the aggregate revenue-collection target would be revised downward by end of this FY as per trend of the last fiscals.

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