The National Board of Revenue (NBR) has declined to accept the International Monetary Fund's (IMF) revised target to collect an additional Tk 570 billion in taxes next year.
In a meeting with an IMF team on Monday, the NBR chairman along with his board members from income tax, VAT and customs, made it clear that the current economic context was not ready to take the pressure of high tax burden to meet the target.
The IMF mission arrived in Bangladesh on April 05 to review the country's economic outlook with an eye to disbursing the lender's fourth and fifth tranches.
NBR officials, however, said the revenue collection issues might not stand as major barriers to release both tranches of the IMF loan next June.
A senior tax official said the IMF team expressed its deep disappointment over the NBR's non-acceptance of higher targets against the release of next tranches of its $4.7-billion loan.
"The IMF team will visit the NBR on Wednesday to further discuss its conditions," he added.
According to NBR officials, the IMF may revise the targets for revenue mobilisation in the next meeting.
At Monday's meeting, the IMF mission sought to know what policy decision on higher tax mobilisation the NBR was planning to frame for the next fiscal year.
A senior member (income tax) said the NBR could not place a briefing on policy changes to the IMF this time. "We've explained our major problem-the implementation of existing laws."
Tax collection could be raised by intensifying law enforcement, he added.
VAT and income tax returns submission is poor compared to that of registered taxpayers, according to the NBR official.
"The NBR is doing all structural benchmarks such as medium- and long-term revenue strategy (MLTRS), and separation of tax policy from implementation wing, but is unable to increase taxes to that level to meet the target."
He said the NBR might be able to collect 50 per cent of the additional tax mobilisation requirement of the IMF.
According to officials, a sudden tax hike last January to meet an additional Tk 120-billion revenue requirement of the IMF sparked huge criticism countrywide.
The NBR would be able to collect Tk 80 billion of the target this FY, they said.
To promote local and foreign investment, the revenue board is now under pressure to cut some taxes, including turnover taxes. On the other hand, the IMF has mounted pressure to increase the same, they added.
Dr M Abu Eusuf, executive director of local think-tank Research and Policy Integration for Development (RAPID), praised the NBR's stand to make its position clear without giving any false hope.
"I appreciate the NBR chief's honesty to explain the reality to the IMF for the first time on the revenue collection perspective," he told the FE. Dr Eusuf thinks the revenue collection issue will not stall the IMF's loan disbursements in June. However, he predicts that the IMF may extend the deadline to achieve its loan terms for the NBR.
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