Political turmoil triggers concern about revenue collection shortfall

Doulot Akter Mala | Published: December 11, 2013 00:00:00 | Updated: November 30, 2024 06:01:00

The tax collection drive has suffered a severe blow following the persistent political unrest and blockades triggering a concern about a big shortfall in internal revenue mobilisation in the current fiscal year.
Achieving the existing aggregate tax revenue collection target of Tk 1.36 trillion is uncertain as the taxmen are neither able to take any effective steps about tax collection nor they are able to find out any new taxpayers, according to sources.
Tax officials said hardly Tk 1.20 trillion might be collected in the fiscal year (FY) 2013-14, if the situation improves, as tax collection depends on the country's overall economic and GDP (gross domestic product) growth.
The International Monetary Fund (IMF) recently projected the GDP growth at 5.5 per cent against the government target of 7.2 per cent in the current FY.
A senior official of the National Board of Revenue (NBR) said the tax collection target had been set at Tk 1.36 trillion for the current fiscal against the targeted GDP growth of 7.2 per cent. But the tax collection target was unlikely to be achieved in such a situation, he added.
The size of the Annual Development Programme (ADP), Tk 739.84 billion, was also ambitious, he said.
Tax officials of three wings of the NBR-income tax, customs duty and Value Added Tax (VAT)-said they were unable to work by maintaining the normal procedure of tax collection.
Â In the July-November period the corporate tax collection saw a shortfall of Tk 15 billion against its target due to the decline in profits of banks and financial institutions.
Tax officials at field offices said the ongoing political unrest would leave a long-term effect on tax revenue collection.
Income tax officials feared that the stagnant situation in the first half of the current fiscal would affect the revenue collection in the second half.
"We estimated a loss of Tk 5.0 billion per month on account of collection of income tax in the last quarter. It will leave a negative impact on aggregate revenue collection target," said a senior income tax official.
Income tax officials could not pay visit to businesses to net in more taxpayers as most of their outlets remained closed due to the blockades, he added.
Taxmen in some tax offices were sitting idle due to the stagnant situation, he said.
However, in the situation the income tax wing still achieved 29 per cent growth in revenue collection compared to that of the corresponding period.
Collection of VAT that depends on sales of goods faced a blow as shopping malls and businesses could not run properly.
VAT officials said they had the highest target of Tk 510 billion that would be quite impossible to achieve in such a situation. The officials estimated that the domestic VAT collection might miss the target by at least Tk 20 billion.
Tax collection from cigarettes, the largest revenue source, fell by a half in October and November, official data showed.
A senior customs official said import of commodities involving higher amounts of revenue dropped sharply in the current year.
Overall imports fell significantly in October over the previous month due mainly to the ongoing political turmoil, he said.
Opening of letters of credit, generally known as import orders, dropped by 11.23 per cent to US$ 2.79 billion in October from $3.15 billion in September. "Imported products that reached the port cannot be supplied across the country due to the political volatility," the official said.
The demand for luxury and less important goods also dropped significantly, the official said.
In the first four months of the current FY, the NBR faced a shortfall of Tk 31 billion against its target.Â The board collected Tk 334 billion against its target of Tk 366 billion.
Officials said the gap between collection and target was widening fast with frequent political shutdowns across the country. The shortfall was Tk 13 billion in the first quarter.