Dr. SM Jahangir Alam :
Budget deficit is when expenditure is more than income. Revenue is the main source of income in Bangladesh.
But I don’t know that Bangladesh has been able to meet the income target set in the budget. The size of the budget is increasing every fiscal year, along with the size of the deficit.
In the current financial year 2023-24, the budget deficit has been estimated at about 2 lakh 62 thousand crore which is 6.2 percent of the GDP, which was (revised) 5.5 percent in the previous fiscal year (2022-23). The budget deficit is covered by domestic and foreign loans. It is noteworthy that the foreign debt has already exceeded one hundred billion dollars. And the internal debt is about 8 lakh crore.
Let’s talk about revenue. Every year the revenue targets set in the budget are not met. Rather, the revenue deficit is increasing. The fiscal deficit rate was 8.55 percent in FY 2015-16 which increased to over 10 percent in FY 2022-23.
It should be noted here that revenue is of two types namely tax revenue and non-tax revenue. Basically, tax revenue is the main source. Non-tax revenues have not averaged more than 1 percent in the past two decades. Notably, tax revenue growth is not increasing, but rather decreasing.
In the fiscal year 2018-19, the tax revenue growth rate was 9.81 percent, which decreased to 8.67 percent in the last fiscal year 2022-23 (Source: Economic Survey-2023). Every day the economic activity of the country is increasing, the number of houses, cars and millionaires is increasing. But the revenue is not increasing compared to that.
In the first eight months of the current (2023-24) financial year i.e. from July to February, there has been a 16 percent increase in government revenue collection. Even after this the National Board of Revenue (NBR) is lagging behind the target.
In these eight months, NBR is now at a revenue deficit of Tk 18,221 crore. The single largest increase in the first eight months of the fiscal year came from income tax, at nearly 20 percent. Besides, the income tax collection has increased by 29 percent in the last February.
On the other hand, there has been an increase of about 11 percent in import tax collection and more than 16 percent in VAT collection in the last eight months. 2 lakh 26 thousand 586 crore of revenue has been collected in the first eight months of the financial year. 1 lakh 83 thousand crore taka has to be collected in the remaining four months which does not seem to be possible.
Former Finance Minister AHM Mustafa Kamal told the National Assembly on June 11 that the number of income tax payers in the country is 89 lakh. About 35 lakhs of the total population of the country pay taxes directly to the government. But this number should have been 65 to 70 lakh. That is, almost half of the taxable people do not pay tax. But the number of millionaires in the country is increasing.
In the last three months alone, new millionaires have become in the bank, that is, the number of accounts with reserves of over 1 crore to 50 crore taka is about 3500. According to a recent report of Bangladesh Bank, at the end of June, the number of millionaires in the country increased to 1 lakh 13 thousand 554 people. At the end of last March, this number was 100,000 and 192 people.
On the other hand, the number of people who have kept more than 50 crore rupees in the bank is 1 thousand 824 people. Cars, multi-storied buildings are being built overnight. According to BRTA, there were 14 lakh 27 thousand 368 motor vehicles in Bangladesh in 2010, which in December 2023 stood at 59 lakh 52 thousand 920. Private cars increased from 2 lakh 7 thousand 969 to 4 lakh 94 thousand 641 during the same period.
The total number of motor vehicles in the capital Dhaka in 2010 was 5 lakh 75 thousand 501 which increased to 20 lakh 81 thousand 260 till December 2023. At the same time private cars increased from 1 lakh 60 thousand 170 to 3 lakh 39 thousand 418. And there is no account of the house. Multi-storied buildings are being built overnight. The owners of these houses and cars, do they all pay taxes to the government? This is about the house and the car.
Revenue evasion is a common issue in Bangladesh. Customs evasion is being done in various ways including import duty, VAT, institutional duty. Again big taxpayers are running to court without paying tax. More than 32 thousand revenue related cases are pending in different courts of the country. The amount of uncollected revenue is 49 thousand crore.
The National Board of Revenue (NBR) is not able to collect the unpaid revenue as the cases related to Customs, Excise, VAT, Income Tax, Musak and Bond are not settled. Among them, 23 thousand 958 crore of revenue is withheld against 8 thousand 826 appeals and writs in the Supreme Court.
The vested interests have mainly exploited the ongoing procrastination of the judiciary and withheld the revenue of thousands of crores of takas. They are using litigation as a tool to withhold revenue. At present, there are multiple benches in the High Court for disposal of revenue related cases, but it is not sufficient.
Many cases are pending in court for years. Thousands of crores of takas of revenue is trapped in it. It is noteworthy that the state-owned commercial and service enterprises are also not paying the government revenue on time. The bottom line is that almost half of the able-bodied individuals and organizations do not contribute revenue to the government. The National Board of Revenue (NBR) failed to collect that revenue. However, the National Board of Revenue has various limitations and irregularities. They have a shortage of manpower, besides lack of proper responsibilities which needs to be overcome.
The author is Bir Muktijoddha, Former Tax Commissioner and Director-Bangladesh Satellite Co. Ltd.
