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Jan tax revenue shortfall widens

MoF likely to revise target downward

Doulot Akter Mala | March 13, 2019 00:00:00

Tax revenue collection shortfall became even bigger in January last and stood at around Tk 333.03 billion until January of the current fiscal year (FY), 2018-19. A notable gap in VAT and customs duty mobilisation is largely responsible for the rise in tax revenue shortfall.

The National Board of Revenue (NBR) collected revenue worth about Tk 1.17 trillion in July-January period of the FY against its target of Tk 1.51 trillion for the period.

Until December, the revenue shortfall was Tk 280 billion that worsened in January.

Meanwhile, tax revenue collection grew by 7.09 per cent in July-January period of FY 19 compared to that of the corresponding period last year, according to an unofficial provisional data of NBR, obtained by the FE.

Experts and economists opined that there would be a significant shortfall in aggregate revenue collection in the current FY following the sluggish growth.

They said despite smooth movement of all the economic indicators, the revenue collection performance remains poor.

Former NBR chairman Dr Abdul Mazid said the large shortfall in revenue collection proves that there is 'internal haemorrhage' in the economy.

He noted that macro-economic inconsistencies followed by huge expenditures in the election year resulted in high bank borrowing of the government due to the shortfall in tax revenue collection.

"Growing volume of non-performing loans (NPL) is another reason behind decline in profits by the banks and large taxpayers, as they have to provision from their profits."

Also, some of the large corporate entities, including the banks, have to spend a significant amount on Corporate Social Responsibility (CSR), where they get tax exemption, he further said.

He suggested the government high-ups take the revenue shortfall seriously and initiate actions to beef up its collection.

Among the three wings of the NBR, VAT department faced the highest Tk 139.75 billion shortfall against its target, followed by customs department Tk 113.78 billion, and income tax Tk 80 billion.

In July-January period, both the VAT and customs wings achieved poor growth, 6.52 per cent and 4.18 per cent respectively, over the corresponding year.

Officials said the revenue collection growth showed a poor performance since targets set earlier for the current FY, in most cases, were unrealistic and ambitious.

They also said the ambitious target for tax revenue collection might not be achieved this year.

Meanwhile, the Ministry of Finance (MoF) is likely to cut the original revenue collection target to Tk 2.80 trillion from the existing target of Tk 2.96 trillion.

Earlier, the NBR chief said aggregate tax revenue collection may stand at Tk 2.50 trillion by the end of this FY.

However, Mr Mazid opined that sluggish growth in the second half of the FY is giving a signal that the NBR may face a significant amount of shortfall in the current FY.

He also said the organisation is 'out-of-the track' this year, as it could not gear up efforts to mobilise revenue collection in the election year.

There was no surveillance of the NBR during the national polls to monitor tax compliance by the candidates, he added.

According to the NBR data, the average revenue collection growth rate was around 14-16 per cent in the last five years.

Officials said the revenue board is lagging behind this year due to offering significant tax exemptions ahead of the election following persuasion of different influential quarters.

The NBR is compiling actual revenue collection data this year to avoid inflated data. So far, it has published reconciled data this year matching with the Comptroller and Auditor General (CAG) office, they added.

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