Uncertainty in achieving VAT collection target

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Doulot Akter Mala The Large Taxpayers Unit (LTU) of VAT wing is limping with acute shortage of skilled manpower and logistics support causing uncertainty about achieving the targeted 40 per cent growth in revenue collection in the current fiscal year. The wing which contributes 59 per cent of the total target of Value Added Tax (VAT), is running with one-third of its required manpower and without proper logistics support. There are 74 officials in the LTU, a brainchild of the International Monetary Fund (IMF), against approved posts of 188. Officials said some skilled officials were transferred recently while the existing ones are awaiting transfer. The target for LTU VAT has been set at Tk 309 billion against aggregate target of VAT of Tk 510 billion. A total of 168 companies including mobile phone, cigarette, cement, tiles and medicines, are the major VAT payers under the wing. Officials said the aggregate revenue collection target of Tk 1.36 trillion might face a blow unless the wing is provided with manpower and logistic support to monitor ompanies intensively. In the first two months of the current fiscal year, the LTU under the VAT achieved 29 per cent growth in revenue collection against its targeted 40 per cent over the corresponding period last year. LTU collects taxes from 168 organisations, both in public and private sectors. The department was set up in 2005 as part of the IMF advice to streamline the country's revenue administration. Tobacco, telecom and gas companies are usually top Vat payers in the country. The LTU was formed under the RIRA project having two components namely, tax-- established in 2002 and Value Added Tax (VAT)-- in 2005. Revenue officials said the government formed the LTUs expecting substantial revenue earnings. But the wing remained neglected in terms of shortage of skilled manpower and logistics support despite setting higher target for revenue collection. However, field level officials are predicting revenue shortfall following sluggish economic growth centring ongoing political tension ahead of general election in the second quarter of the current fiscal year. They said manpower shortage and lack of logistics in major tax collection wings will worsen revenue shortfall further. "Economic activities should run smoothly for proper collection of VAT. Its consumption tax depends on business activities and purchase of goods by consumers," said a senior VAT official. To avert the situation, the government needs to look into untapped sector and facilitate taxmen with necessary logistics in a bid to intensify their efforts for VAT collection, he added. VAT officials need vehicles to move in different offices and conduct field inspection. But large taxpayers unit has only three vehicles for the purpose. Annual allocation of fuel oil for vehicles for LTU is also insufficient that is consumed in six months, they said. Collection of VAT and income tax is the priority areas of the government for internal revenue collection. The LTU should get priority as it contributes major part of consumption taxes, sources said.