Economic uncertainty impacts domestic revenue mobilisation

The ongoing economic uncertainty has affected domestic revenue mobilisation in Bangladesh, resulting in negative growth in the first quarter of the current fiscal year (FY).
According to provisional data from the National Board of Revenue (NBR), revenue mobilisation decreased by 6.07 per cent or Tk 45.84 billion in the July-September period compared to the same time last year.
For the months of July and August, revenue collection showed negative growth rates of 0.50 per cent and 10.97 per cent respectively.
Economists attribute this decline to the political and economic transitions occurring in Bangladesh.
Dr M Abu Eusuf, the lead on Domestic Revenue in the White Paper committee, noted that the strategy for mobilising domestic revenue has shifted amidst changes in governance, leading to stagnation during this period.
Dr Eusuf, also executive director of the think tank RAPID, mentioned that the NBR's regular activities have encountered challenges, impacting last year's revenue growth.
He emphasised that tax revenue targets are not set based on evidence, which has resulted in a shortfall in achieving actual goals.
In the first quarter, the NBR mobilised Tk 709.02 billion, down from Tk 754.87 billion in the corresponding period last year. The target for this period was Tk 964.99 billion.
Specific areas of revenue collection lagged, with VAT falling short by 10.02 per cent, customs by 7.23 per cent, and income tax by a mere 0.03 per cent.
VAT wing has collected Tk 255.93 billion in this period, down from Tk 284.45 billion last year, against a target of Tk 341.81 billion.
Income Tax wing collected Tk 231.64 billion, slightly under last year's Tk 231.71 billion, with a target of Tk 336.81 billion.
Customs department collected Tk 221.45 billion, down from Tk 238.71 billion last year, with a target of Tk 286.37 billion.
The NBR's collection figures for July, August, and September were Tk 202.69 billion, Tk 216.29 billion and Tk 290.02 billion respectively.
For the current fiscal year, the NBR aims to collect Tk 4.80 trillion in tax revenue, necessitating a 25-percent increase in mobilisation from the previous year.
Provisional estimates from last fiscal year indicate that the NBR gathered Tk 3.82 trillion against a target of Tk 4.30 trillion, later revised to Tk 4.10 trillion.
A senior NBR official said that the new chairman has committed to publishing only reconciled data to prevent misrepresentation.
He said that the data compiled in the ibas++ system often varies, leading to confusion in interpreting overall economic trends.
The official said such reconciliation is one of reasons of negative growth in domestic revenue mobilisation.

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