It's nothing new that the revenue collections in the first two months of the current fiscal year fell well short of targets. Every year the taxman is laden with targets that are never achieved and this combined with inability to spend invariably leads to an adjustment in implementation of the Annual Development Programme. That will come towards the end of the financial year and no one is held accountable. Indeed had the government been a business enterprise, heads would have rolled.
As it stands the National Board of Revenue has been tasked with a whopping 45% increase in collection over that of last year and the Finance Minister didn't mince words when he said barring instructions from the Prime Minister there would be no further exemptions allowed. According to him no country provides as many exemptions in the world and the 'Chief of the NBR' has attributed clever dodging by businesses behind the maximum amount for exemption as being one of the reasons for lower collection.
The other two were slower economic activity exacerbated by the Eid festival and unseasonal rains. There was another factor that hasn't been elaborated on and that is cigarette taxation. In a way this last element is ironic. Taxes were raised on cigarettes to discourage consumption and if that is the case then there should be no cause for complaints.
The Minister also took umbrage over the fact that whereas, in his opinion there are forty million enabled tax payers in the country, the NBR has track of only 4.4 million out of which only 2.2 million TINs have been issued and fewer have paid their income tax. Having said that, growth in income tax has outstripped that of VAT and customs duty tax growth. The bulk of the government revenue comes from VAT and customs duties. Customs are reeling from a slowdown in capital machinery imports as investors show reluctance in importing goods. The golden goose that is telcos have had bans imposed on import of their goods for not paying what government claims as unpaid dues. These all combine to the over three trillion Taka target set for the NBR, what was doubtful to begin with. The minister has implored an extension of the tax net, something that has been repeatedly parroted by Finance Ministers over the years. With the development of the economy it cannot be that stretching down to the Upazila level businesses are unable to pay due taxes. The fact remains that VAT and Customs duties are still being focused on the larger cities and the sea and land ports.
The essence of any budget is proper resourcing against proven collections. Mere fixing targets without consulting businesses on possible sales and imports will invariably leave gaps as is the case with our budgets. The pre-budget consultations focus too much around exemptions and stimulus packages rather than that which can enhance revenues. Even after budgets are approved by Parliament the long line of exemption-seeking businesses often succeed in getting their way. Mostly these relate to the need for import of essentials that we fall short of such, as is the case with rice after the unseasonal floods and currently the onion crisis. The list continues to grow with the BGMEA now seeking a raft of relief measures to bolster flagging exports. Unwanted as the situation may be, there has to be a balance between what is required and which is achievable. This is where successful private businesses can be learning examples, even for the government. Over ambitious development targets are just as bad as overambitious revenue targets.
The government has borrowed in the first three months more than the half -yearly target from banks in the face of flagging sales of bonds. And that came about from the simple unrealistic doubling of tax rates on interest from these instruments.
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