Govt may miss tax collection target

The government is unlikely to achieve its tax revenue collection target this fiscal as the mobilisation pace remained in single digit until April for a persistently sluggish economic trend.
Revenue collection growth remained below the last five years average growth 12 per cent in fiscal year (FY) 2022-23 as import of products fell with restrictive measures of the government amid dollar crisis.
Import declined by 12.33 per cent in the July-March period over the corresponding period last year, according to Bangladesh Bank data.
Economists said existing policy measures were not commensurate with the required action the country should take to make the economy stable.
Import of raw materials, capital machinery and intermediate goods faced a sluggish trend, which would delay economic recovery, said Policy Research Institute (PRI) executive director Dr Ahsan H Mansur.
"Initially, it was assumed that the country would be able to come out from the dollar crisis within a short time, but it turned to a prolonged problem for not taking a strict monetary policy."
According to Dr Mansur, the government may collect a maximum of Tk 3.30-trillion tax revenue in FY23 against the Tk 3.70-trillion target only if the situation remains unchanged.
"It is not possible to resolve the dollar crisis keeping the inflation rate as high as 10 per cent," added the analyst.
Earlier, the Centre for Policy Dialogue (CPD) projected a possible shortfall in tax revenue collection of Tk 750 billion in FY23.
Domestic tax revenue collection faced a shortfall worth Tk 375.33 billion until April against its target.
In the first 10 months, the National Board of Revenue (NBR) has achieved 5.90-per cent growth over the same period last year, disclosed the NBR's provisional data.
Officials said the data might be presented to the prime minister at a budget meeting with officials of finance ministry, NBR and other relevant wings on Wednesday.
The NBR collected Tk 2.47-trillion tax revenue during the July-April period against its target for Tk 2.84 trillion.
It will have to collect Tk 1.22-trillion revenue in May and June, Tk 613.03 billion per month, to achieve the Tk 3.70-trillion target set for this year.
VAT (value-added tax) collection grew by 12 per cent from July to April followed by income tax 3.15 per cent and import taxes 1.68 per cent, revealed the data.
Income tax wing collected Tk 780.58 billion from domestic sources against its target for Tk 834.28 billion.
Meanwhile, VAT wing collected Tk 951.03 billion against the Tk 1.08-trillion target.
On the other hand, customs wing collected Tk 742.30 billion against its target for Tk 933.47 billion.
In the July-March (Q3) period of FY23, the NBR has achieved 8.30-per cent growth, which was 14 per cent in the corresponding period last year.
In Q3, the NBR collected 61 per cent of the total revenue target for the entire FY.
On average, the NBR collected Tk 680.02 billion in taxes in each quarter from 01 July 2021 to 31 March 2022, it said.
NBR officials said the revenue collection usually gears up in the last quarter following execution of the development expenditures.
The VAT wing achieved 15-per cent growth during the July-March period too.
On the other hand, income tax and customs wing registered below than average growth of 4.87 per cent and 3.63 per cent respectively.
A senior NBR official said the government's import curb has shrunken revenue collection from customs sources and affected income tax collection too.
Some 70 per cent of income tax comes as advance income tax (AIT) from import of products, he added.
The official, however, expects a twofold increase of income tax collection during the April-June period following assurances of field-level tax offices.
He said VAT collection shows hefty growth due to an escalation in commodity prices with inflationary pressure.
Targets for income tax have been set at Tk 1.22 trillion, VAT at Tk 1.36 trillion and import taxes at Tk 1.11 trillion in FY23.
Officials have expressed optimism to reach close to the target this year only if the economic situation remains stable.
The average revenue collection growth in the last five years has been 14 per cent.

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