Trade
4 years ago

Policy panel worried as tax collection dips

Suggests putting an end to tax waiver culture

Picture used for illustrative purpose only — Collected
Picture used for illustrative purpose only — Collected

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Falling revenue has worried top policymakers as a coordination council sat on Monday to take stock of the situation.

The meeting weighed options, including widening the area of value added tax, VAT, net to help offset the revenue deficit.

It also discussed the possibility of trimming the existing tax exemption facilities offered to different sectors.

The committee on "fiscal, monetary and exchange rate" met at the secretariat to review the country's overall macroeconomic situation, where finance minister A H M Mustafa Kamal was in the chair.

The views came against the backdrop of falling trend in revenue income during the recent months despite strengthening collection drives by the tax authorities.

The tax authority faces a revenue shortfall of more than Tk 149 billion during the first quarter of fiscal year 2019-2020.

During the period, the National Board of Revenue, NBR, was able to collect Tk 473.88 billion as tax revenue against the target of Tk 622.94 billion, according to official figures.

Among others, commerce minister Tipu Munsh, Bangladesh Bank (BB) governor Fazle Kabir, finance secretary Abdur Rouf Talukder, NBR chairman Mosharraf Hossain Bhuiyan and member of the Planning Commission Shamsul Alam attended at the meeting.

The meeting discussed the key indicators of the macro-economy, including the exchange rate of the local currency against the US dollar and the government's bank borrowing, according to sources.

Regarding the exchange rate, the meeting said the exchange of Bangladesh Taka will be adjusted in line with the market requirements, they added.

Meanwhile, the local currency depreciated by 90 poisha against the greenback in the inter-bank foreign exchange market from January 02 to November 14.

The greenback was quoted at Tk 84.80 each in the inter-bank market on November 14 against Tk 83.90 on January 02 this calendar year.

The latest depreciation came against the backdrop of falling trend in the export income during the first four months of the current fiscal.

Export earnings dropped by nearly 7.0 per cent to $12.72 billion during the July-October period of the FY'20 from $13.65 billion during the same period a year earlier, according to data of the Export Promotion Bureau.

"The pressure on the country's foreign exchange market may increase in December due to the lower export income in recent months," Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh, or ABB, told the FE earlier.

Meanwhile, the government's net bank borrowing stood at Tk 440.97 billion, which was more than 93 per cent of the total target as of November 19 of FY '20, according to a the BB's confidential report.

Of the total, the government borrowed Tk 373.74 billion from the banks using treasury billsand bonds, and the remaining Tk 67.23 billion from the central bank.

A falling trend in sales of national savings certificates coupled with a shortfall in revenue collection has led to higher bank borrowing by the government during the first quarter, said banking sector insiders.

The government has set a target to borrow Tk 473.64 billion for FY '20, up from Tk 308.95 billion in the previous year, according to the budget documents.

Under the arrangement, it will borrow Tk 280.94 billion by issuing long-term bonds while the remaining Tk 192.70 billion will come from T-bills.

Currently, four T-bills are being transacted through auctions to adjust the government's borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.

Also, five government bonds with tenures of two-year, five-year, 10-year, 15-year and 20-year are traded in the market.

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