Al Amin :
The National Board of Revenue’s (NBR) extensive efforts to meet the revenue collection target have largely been unsuccessful, jeopardizing the fulfillment of the loan conditions set by the International Monetary Fund (IMF).
The IMF has specified an objective to elevate Bangladesh’s tax-to-GDP ratio from 7.8% to 8.3% by the end of the current fiscal year 2023-24, aiming to reach 9.5% by FY26.
To adhere to the terms of the IMF’s $4.7 billion loan agreement, the government is required to augment its revenue by at least an additional Tk65,000 crore by the end of FY24, marking a significant 20% increase compared to the revenue collected in the ongoing fiscal year.
In efforts beyond the NBR’s rigorous campaigns, the treasury has dispatched letters to various governmental and private entities requesting details of their financial health, as reported by officials.
These officials have also embarked on nationwide campaigns to expand the tax base and combat tax evasion.
These efforts have somewhat positively influenced revenue collection, with the treasury witnessing a 14.82% year-on-year increase in the first seven months (July-January) of the current fiscal year, despite the economic slowdown triggered by a global recession.
Historically, the average growth in revenue collection over the past five years stood at 10.64%, with a growth rate of 9.99% during the same period of the previous fiscal year, as per provisional data from the NBR.
During the first seven months of the current fiscal year, the NBR collected Tk 197,839 crore, falling short of the revised revenue collection target of Tk 215,590 crore set for the period across its three divisions (Customs, VAT, and Income Tax).
The gap in tax earnings, which expanded to Tk 17,751 crore in the first seven months of the current fiscal year, indicates that the NBR’s actions are insufficient to meet the IMF’s revenue collection goals.
Economists suggest that if the trend in revenue earnings persists, the shortfall could grow by the fiscal year’s end.
The NBR has adjusted its revenue collection target to Tk 410,000 crore for the current fiscal year, down from the original target of Tk 430,000 crore.
Dr. Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI), emphasized the necessity for a comprehensive reform in the revenue sector to enhance tax collection.
He noted that Bangladesh has one of the lowest tax-GDP ratios, making it challenging to achieve the ambitious tax collection target without significant reforms.
He also mentioned that the revenue collection deficit might further increase by the fiscal year’s end if the current pace of tax earnings does not improve.
“A comprehensive reform needs to be implemented in the revenue sector to increase tax collection.
Bangladesh maintains a lowest tax-GDP ratio.
So, it is impossible to achieve the huge tax collection target without implementing the desired reform activities,” he said.
He further said the revenue collection deficit may increase further at the end of the fiscal year, if the current pace in tax earnings continues.
During the seven-month period, NBR fetched Tk57,540 crore from the customs wing posting 9.72 per cent year-on-year growth, Tk77224 crore from VAT wing posting 15.95 per cent growth and Tk63,074 crore from income tax wing registering a 18.42 per cent growth, according to the provisional data of the NBR.
