Failure in revenue collection spells danger

It would appear that the year hasn't started well for the State. Although the sticky question concerning continuation of the government has been settled through the holding of the 12th parliamentary election, things on the economic front are not that comfortable, it seems. On the face of things, the government appears to have been getting tough on law breakers, particularly the ones hoarding essential food stuffs. Yet, the national board of revenue (NBR), which is the principal generator of revenue for the State, has failed to meet the stated revenue target by as much as Tk232.27 billion in the first half of the current fiscal year (July 2023 - June 2024).
This situation should be ringing alarm bells for policymakers. Although the NBR remains hopeful about meeting that target, there are issues that need to be resolved first. The International Monetary Fund (IMF) had tagged the condition of raising the tax-GDP ratio by 0.5 per cent this fiscal year with its latest $4.7 billion loan package. Both domestic and external issues, including dollar crunch and restrictions on import have affected revenue mobilization by the NBR. The decline in domestic consumption in view of the rising prices of most commodities has also shrunk revenue receipts.
The NBR isn't solely to blame of course. As pointed out by certain economists, the IMF demand can be largely met if the NBR rationalizes tax exemptions that have long been enjoyed by a number of sectors in the economy. The question is whether such large-scale tax exemptions should be given to companies under various sectors at a time of national economic crisis. Many tend to believe that such exemption retards the natural growth of sectors that have become complacent and aren't doing enough to become competitive.
There is no denying the fact that manufacturing has taken a nosedive due to several factors including, failure to import requisite capital machinery and raw materials, rise in labour and energy costs, a general fall in demand for goods as inflationary pressure on essential commodities hammered consumers. All these factors have played their role and it is unjust to place blame on any particular regulatory authority for what is essentially a failure to manage the situation better at policy level. However, the NBR has consistently failed to improve its performance primarily due to its inability to carry out the much-needed internal reforms and automation.
According to provisional data that has been made available, the NBR collected Tk1.65 trillion in taxes over the July-December period against a target of Tk1.88 trillion. The problems lie in the fact that revenue collection was missed by three wings of NBR, i.e. income tax, customs and VAT (value added tax). VAT collection came in Tk60.70 billion short, customs revenue at Tk86.63 billion and income and travel taxes fell short by Tk85. 92 billion. Setting higher targets by policymakers has always been the norm to keep revenue authorities on their toes. Targets, however, have never been met. The problem, of course, is that planning is done based on revenues. Unless the policymakers make requisite changes in the manner revenue is targeted and vigorously pursued, these shortfalls will remain. A fundamental rethinking is required here and the answers are all there. What is lacking perhaps is the political will to make an earnest attempt to do what are needed most.