NBR fears sharp fall in revenue collection

The National Board of Revenue (NBR) fears a massive fall in revenue collection in the current fiscal year (FY), as all the major tax collection indicators are showing a negative trend amid the ongoing political turmoil.
Tax collection from service and production sectors dropped significantly in November, following stagnation in business activities due to recurrent spells of shutdown.
Revenue providing sectors like cigarette, bank, insurance, hotel, beverage, cell-phone, soap and tiles failed to perform as per expectation, triggering uncertainty over achieving the target of revenue collection in the FY 2013-14.
Overall import declined significantly in October, causing fall in banks' earnings from commission against opening of letters of credit (LCs)
LCs against import, generally known as import orders, dropped by 11.23 per cent to $2.79 billion in October from $3.15 billion in the previous month, according to the central bank statistics.   
Value Added Tax (VAT) collection from banks also missed the target set for the first quarter of FY 14 (July-Sept).
VAT collection from some 17 commercial banks under the Large Taxpayers Unit (LTU) suffered Tk 30 million shortfall in Q1, compared to the corresponding period of the previous fiscal.
Banks collect 15 per cent VAT from clients as service charge, and deposit it to the public exchequer.
The National Board of Revenue (NBR) set Tk 1.81 billion VAT collection target from service charge from the 17 banks under LTU in July-September period.
The wing collected Tk 1.37 billion in the first quarter of FY 14, against Tk 1.40 billion in the corresponding period.   
On the other hand, cigarette is the single largest tax earning sector under LTU. But LTU's revenue collection from sales of cigarette halved in November.
In October, LTU collected Tk 10.57 billion from sales of cigarette that dropped to Tk 4.50 billion until November 21, official data said.
Mobile phone companies paid Tk 9.40 billion as VAT, though the target was set at Tk 16.88 billion. The sector also lagged behind by Tk 4.03 billion from the previous year's collection.
A senior VAT official said tax collection from cell-phone SIM (subscriber's identification module) dropped sharply following downward revision of its tax.
"The NBR halved the tax on SIM card to Tk 300 that will cause Tk 10 billion loss to the public exchequer this year," he said.
VAT collection from five major luxury hotels - Ruposhi Bangla, Pan Pacific Sonargaon, Radisson, Westin and Regency - lagged behind their respective targets.
A large number of international tourists cancelled their scheduled visit to Bangladesh due to political volatility, officials said.
These five hotels contributed Tk 204 million VAT in the first quarter against the target of Tk 250 million.
Tax collection from insurance sector also dropped sharply in Q1. The NBR received Tk 370 million VAT from the sector against Tk 320 million in the corresponding period.
VAT collection target from insurance sector was Tk 420 million for July-September period of the current fiscal.
Beverage sector paid Tk 1.07 billion tax in July-September period, missing its target of Tk 1.14 billion.
Tax collection from sales of tiles dropped to Tk 380 million against its target of Tk 570 million.
It also posted a negative growth over the previous year's collection. Last year, the sector contributed Tk 410 million to the public exchequer.
However, cement sector's performance was satisfactory until October last. But tax officials are worried about the adverse impact of political chaos on the sector in November and December.
VAT collection from cement sector grew by 75 per cent over the corresponding period of the previous FY following intensive monitoring by the tax authority.
LTU collected Tk 470 million VAT from cement sector in the first quarter of this fiscal, against Tk 270 million in the corresponding period. It also surpassed the target of Tk 350 million.
The NBR officials said despite fall in revenue collection from the major revenue providing sectors, the taxmen are trying their best to gear up collection.
Of the Tk 1.36 trillion aggregate tax revenue collection target, the revenue board set the highest target of Tk 510 billion for the VAT wing.
LTU contributes more than 40 per cent of the total VAT collection target. It collects 70 per cent of the amount from products, while 30 per cent from service sector.
LTU under the VAT wing collected Tk 52 billion in the first quarter against its target of Tk 60.41 billion. Of its total collection in July-September period, consumption of products contributed Tk 37.02 billion, while service sector Tk 15.64 billion.
However, the wing achieved 23 per cent growth in revenue collection over the corresponding period.
Talking to the FE, NBR chairman Ghulam Hussain said uncertainty looms large over the fate of revenue collection due to political volatility.
"We may have to bear the failure of missing the revenue collection target this fiscal, as the overall economy is stagnant," he said.
The customs houses are kept open seven days a week, but the ports cannot deliver services as required. After each spell of political shutdown the ports have to face serious rush for unloading goods, he said.
"Imported goods, released from the ports, cannot be delivered to other places across the country. Long queues of trucks are seen on the Dhaka-Chittagong highway", he added.
Higher carrying cost is also causing a substantial hike in prices of essential commodities, he pointed out.