The National Board of Revenue (NBR) is set to propose a downward revision of the aggregate revenue collection target to Tk 1.20 trillion for the current fiscal year (FY) as some major economic indicators showing a negative trend.
Expenditures of the Annual Development Programme (ADP), import of revenue-generating goods and exchange rate of taka against US dollar showed a downward trend in the first half of the current FY. All these have left an adverse effect on revenue earnings.
The shortfall in tax collection was triggered by the political turmoil in the third quarter of the current FY.
Following the trend, Finance Minister AMA Muhith on Monday also unveiled a plan to cut GDP growth to 6.3 per cent from the projected 7.2 per cent for FY 2013-14.
With the downward projection of the GDP growth, the NBR officials have felt the necessity of revising the tax revenue target which was set in line with the targeted GDP growth for 2013-14.
In the first half of the current FY, the NBR faced nearly Tk 85.09 billion shortfall against its target. However, the Board achieved 9.0 per cent growth over the corresponding period against its targeted 24 per cent growth.
Officials blamed political turmoil for the large amount of shortfall in the July-December period.
Import revenue earnings showed a negative 3.35 per cent growth in the July-December period of fiscal 2013-14. All three wings of the NBR -- income tax, value added tax (VAT) and customs duty -- could not achieve their respective targets.
In a meeting with the Finance Minister Tuesday, top officials of NBR explained the reasons for its proposal for a downward revision.
Sources said the Finance Ministry officials in the meeting proposed to revise the aggregate target to Tk 1.25 trillion from existing Tk 1.36 trillion.
However, the revenue board officials said the target will be ambitious if it is set above Tk 1.20 trillion.
The Board has prepared a report explaining details and reasons of revenue collection growth in the past four years. In its proposal, the NBR has proposed to cut the revenue target Tk 1.20 trillion along with a detailed explanation.
The proposal will be placed to the Finance Ministry for its consideration within a short time.
The Board is set to propose a 9.62 per cent cut on its revenue collection target for FY 2013-14, sources said.
Talking to the FE, a senior official of the NBR said the government could spend some Tk 150 billion in the first six months on its ADP out of its target for Tk 658.72 billion.
Exchange rate for taka against US dollar dropped this year that ate up a major share of import revenue, he said.
"Sluggish trend in both local and foreign investment hit the growth of manufacturing industry in the country," he said.
During the last three months, economic activities faced a blow taking toll on internal revenue collection, the official added.
In the first half of the current FY, the NBR collected an aggregate amount of Tk 489.83 billion revenue against its target for Tk 575.18 billion.
According to a provisional figure of the NBR, the income tax wing achieved the highest growth 21 per cent over the corresponding one. The income tax department collected Tk 156.34 billion in July-December against its target for Tk 190.67 billion.
The VAT wing collected Tk 181.46 billion against its target for Tk 209.90 billion achieving 12 per cent growth over the corresponding period.
The NBR collected Tk 149.37 billion as customs duty against its target for Tk 169.61 billion.
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