The shortfall in revenue collection of the National Board of Revenue (NBR) is Tk 29,008.51 crore in the first nine months (July to March) in the current fiscal year (2022-23).
Experts say import restrictions and dollar crisis have affected revenue collection heavily as the earnings from customs duty and income tax posted a negative growth.
Among these, the biggest deficit is at the import and export level (customs). The amount of this deficit is Tk 15,806.66 crore. Next is the value added tax (VAT) at the local level. The deficit in this sector is Tk 8,244 crore. The lowest deficit is Tk 4,957 crore from income tax and travel, according to sources.
The National Board of Revenue (NBR) collected Tk 2,25,509.02 crore with 8.29 per cent year-on-year growth in the first nine months (July-March) period of the current fiscal year against the target of Tk 2,54,517.53 crore.
The revenue board fetched Tk Tk 2,08,238.07 crore with 12.12 per cent year-on-year growth in the last fiscal year (2021-22), according to the provisional data of the NBR.
Dr M Masrur Reaz, Chairman of the Policy Exchange of Bangladesh, opined that imports have now gone down by around 25 per cent, which is a reason behind the revenue fall.
"Actually, the government earns revenues from development projects as Value-Added Tax (VAT) and other taxes on imports. But funding of many projects now remains suspended due to the ongoing fiscal pressure, which is impacting the internal resource mobilization severely," he added.
On the other hand, tax collection from corporate firms has declined due to increasing operational costs of the businesses due to the higher inflation, he said.
On the other hand, if the expected pace of revenue collection is not met, it will be difficult to meet the condition of raising the tax to GDP ratio given by the International Monetary Fund (IMF) for the getting loan.
For increasing the revenue earnings in the remaining months of the fiscal year, NBR Chairman Abu Hena Md Rahmatul Muneem on Thursday instructed to take effective collection of arrears, collection of revenue withheld from various government institutions, and take effective steps to prevent evasion.
Revenue is the main source of loan repayment. Economists fear that this imbalance of government loan and revenue in proportion to GDP is creating a major long-term risk for the country's economy. Their statement is that the size of the government's deficit budget is constantly increasing due to failure to collect targeted revenue. As this deficit grows, the government's loan burden also increases. Loan interest payment has become one of the biggest expenditure sectors in the budget at the moment. If the current situation continues, the loan burden of the government will continue to increase.
The former governor of Bangladesh Bank Dr Salehuddin Ahmed said, "Government's loan-GDP ratio is still within the limits if international standards are taken into consideration. But we have to show the issue of loan in the context of Bangladesh. The country's tax-GDP ratio is still limited to 8 per cent. It is also quite difficult to extend it due to the existing reality. If the tax-GDP ratio is 12 to 13 per cent, then the government's current loan can be repaid. However, no such possibility is seen in the near future.
Dr Salehuddin Ahmed said, "The government is undertaking development projects one after another with foreign loans. All projects that are not economically profitable are also being taken up. There is boundless corruption and wastage in the implementation of the projects. If the loan is not utilized in the individual sector, it becomes a default. If you can't take advantage of it, the government's loan will also default."
The National Board of Revenue (NBR) is targeting Tk 430,000 crore. In the current budget which was Tk 370,000 crore. That is, the NBR revenue target is being increased by 16.20 per cent. Apart from this, the government expects Tk 20,000 crore through non-NBR tax and Tk 50,000 crore from non-tax revenue sector. In the current budget, targets of Tk 18,000 crore and Tk 45,000 crore have been given in these two sectors respectively.
The government wants to earn a total of Tk 5,00,000 crore from NBR, non-NBR and non-tax revenues in the next fiscal year. In the current fiscal year it was Tk 433,000 crore. Accordingly, the revenue target in the next budget is increasing by about 15 per cent.
Economist Dr Ahsan H Mansur said that the deficit budget is increasing every year due to the government's failure to generate revenue. No country in the world runs on such low revenue.
Bangladesh's revenue-GDP ratio has come down to 8 per cent. If this cannot be increased, the government's loan from domestic and foreign sources will increase. There will be no solution to the crisis unless the revenue-GDP ratio is raised to at least 20 to 22 per cent.
