NBR has to realise Tk 900b in June

An uphill task it looks as the revenue authority has to realise nearly Tk 900 billion in revenue in June to reach the target for this fiscal year, passing through financial austerity.

Its track record shows the National Board of Revenue (NBR) is left to go cracking on sources in the final month of the fiscal as it collects Tk 250 to Tk 300 billion in tax revenue a month.

Until May 2023, the revenue board had collected Tk 2.80 trillion in tax revenue—mainly from domestic VAT, according to provisional data available with the NBR.

The government set Tk 3.70 trillion as tax revenue-collection target for FY 2022-23.

However, revenue collection until May had come close to the volume of taxes collected in the entire FY 2021-22 worth Tk 2.87 trillion.

The VAT wing of the NBR collected Tk 1.08 trillion followed by Income Tax wing Tk 889.60 billion and customs duty Tk 836.85 billion in the July-May period.

Target for income tax has been set at Tk 1.22 trillion while it is Tk 1.36 trillion for VAT and import taxes Tk 1.11 trillion in FY 23.

NBR officials say share of indirect taxes is gradually going down in the tax-revenue collection. Import duty has declined to 28 to 29 per cent from earlier 45 per cent while direct tax increased to 33 per cent from 22 per cent.

For the upcoming financial year, the Ministry of Finance (MoF) has set Tk 4.30 trillion as revenue-collection target for the NBR to play its prime part in financing an incremental Tk 7.62-trillion national budget of Bangladesh in keeping with the country’s LDC graduation despite some economic setbacks caused by the pandemic and the Ukraine war.

Of the target, Tk 1.54 trillion is set to be collected by the direct-tax wing while Tk 1.16 trillion by the customs wing of the revenue board.

However, the highest quantum is earmarked to be mobilised by the value-added tax (VAT) wing, amounting to Tk 1.59 trillion.

The NBR officials said tax-revenue collection geared up in the month of May compared to that of the previous months of the fiscal due to intensified efforts of tax officials.

Until April, Tk 2.50 trillion had been collected in revenue from domestic sources. Of the amount, Tk 980.15 billion came as VAT, Tk 780.58 billion income tax and Tk 742.22 billion import taxes.

However, NBR officials said there would be a shortfall in revenue collection against the target by the year-end, like in previous years, as it is an uphill task to collect such a large sum of taxes in a shorter period.

Economists, on the other hand, fear pressure to be built up on the existing smaller-than-probable number of taxpayers if the high figure of revenues for the final month has to be chased.

Projections by two leading think-tanks signal high revenue shortfalls in the current fiscal. The Centre for Policy Dialogue (CPD) estimates the shortfall at Tk 750 billion while the Policy Research Institute (PRI) at Tk 546 billion.

With the projected shortfalls in CPD and PRI calculations, the NBR will have to achieve over 32-percent growth in tax-revenue collection in the upcoming fiscal year to reach the Tk 4.30-trillion target.

Domestic tax-revenue collection had faced a shortfall worth Tk 375.33 billion until April against its target. In the July-April period, the NBR achieved 5.90-percent growth over the corresponding period last year, according to provisional data.

Revenue-collection growth was 12 per cent on average during the last five years.

According to the PRI’s Study Center for Domestic Resource Mobilisation, tax-GDP ratio declined to 7.4 per cent in FY 2023 from 7.9 per cent last year.

Dr Md Abdur Razzaque, Chairman of Research and Policy Integration for Development (RAPID) and Research Director of Policy Research Institute (PRI), said, “There is no easy solution rather than expansion of tax net to growth centres and other areas to speed up the domestic revenue collection.”

He thinks the NBR might collect maximum Tk 3.25 trillion in revenue in the FY 23, leaving a considerable amount of shortfall.

“With the below-par revenue collection, the government is in a problem on both sides as it has neither dollar nor domestic revenue to provide power subsidy,” he says.

He suggests that the tax authority should not put pressure on existing taxpayers to mobilise higher revenue but explore new avenues to rope in more taxable people who are still out of the tax net.

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