Taxmen lose hope of getting near revenue target for uncertainty

Taxmen are in doubt about getting the targeted revenue from internal sources in the last quarter (Q4) of the current financial year, as the tax collection has already missed the mark.  
A poor state of businesses, hit by the prolonged political uncertainty, stoked up their fear about a substantial revenue shortfall.
Tax officials of all the three wings of the National Board of Revenue (NBR)--income tax, customs and Value Added Tax (VAT)--said it would be an uphill task to reach the highest-ever targeted growth for tax-revenue collection in the last quarter (April-June).
In the first seven months of the fiscal year, the NBR had collected aggregate tax revenue worth Tk 698.48 billion. It will have to collect a major part, Tk 791.52 billion, in five months (February-June).
However, revenue-receipt data for the month of February has yet to be made available by the revenue board.
Officials said tax-collection target for last quarter is usually set at a higher level as the government projects a boost in  government development works and procurement in that period.
Both economists and taxmen estimate an aggregate shortfall of around Tk 150 billion in tax-revenue collection for the current FY.
The government has set a total target of Tk 1.49 trillion for the NBR in the FY 2014-15.
Dr Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI), sees the target as very high for the current fiscal.
"Domestic VAT collection may be hit hard by the political impasse. Also, tax collection from financial sector, especially commercial banks, is likely to face challenges," he said.
Citing the recent cuts in corporate tax in the Indian budget, Dr Mansur suggests lowering high rates of corporate tax to ensure compliance by the taxpayers.
"Tax collection remains confined to withholding taxes. Administrative monitoring and follow-up can help tap potential taxes from those taxpayers," he said.
An income-tax field official says usually the government sets higher target for Q4 expecting accelerated public-sector development works.
"We have to collect above 50 per cent of aggregate target in April-June period as per the target set by the NBR," he said about the tax arithmetic.
Corporate-tax collection from commercial banks may face a setback in case of decline in net profit with the write-off of bad debts, he added.
"Large companies usually pay advance tax on their annual earnings before submission of tax returns. Tax-revenue collection may be hit if the large taxpayers face liquidity crunch," he said.  
A VAT commissioner said consumption of products got reduced with the political turmoil, causing a significant amount of loss in domestic VAT collection since January this year.
"Shopping malls and markets witnessed a thin presence of consumers. VAT officials cannot ask them to pay tax in view of their poor daily transactions," he said.
Service sector, especially hotels, restaurants and amusement parks, also faced a blow from the volatile political situation. Their business loss also resulted in a decline in VAT collection from the sector, he further pointed out.
However, VAT data until February would be made available by end of this month.
A customs official said the opening of L/C by importers was showing a sluggish trend, affecting import-revenue receipt.
"Fall in international oil prices, downtrend in import of revenue-generating products, appreciation of the taka against the US dollar until January may cause a shortfall in customs revenue collection," he said.
Officials said following the uncertainties the finance ministry is considering lowering the tax-collection target by Tk 14 billion at the end of this month.
Recently, the government slashed the Annual Development Programme (ADP) outlay by 6.62 per cent for the current FY.
Also, the International Monetary Fund (IMF) expects a real GDP growth about 6.0 per cent while the government had projected 7.3 per cent in the current budget.
However, tax-collection growth from corporate income-tax payers is on track--about 25.04 per cent until January.
In the first seven months, the revenue board had achieved 16.74 per cent growth in tax-revenue collection over the corresponding period.
The NBR had collected an aggregate amount of Tk 698 billion until January against its target of Tk 718 billion for the period, revenue board's data showed.
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