Taxmen trim tax revenue target for FY \\\'15

Prevailing political uncertainty and macro-economic situation have made the task of meeting the target of attaining 9.79 per cent tax-GDP ratio in the current fiscal year (FY), 2014-15, difficult, taxmen said.

After analysing the relevant indicators of tax-revenue collection, they have found the feasible tax-GDP ratio this fiscal at 8.95 per cent.
They reviewed previous two years' revenue collection growth to estimate an achievable target for FY 2014-15.
The taxmen feared an aggregate shortfall of around Tk 12 billion in the tax-revenue collection in the current FY. They estimated the maximum aggregate tax-revenue collection at Tk 1.37 trillion against the target of Tk 1.49 trillion.
The National Board of Revenue (NBR) made the forecast at a recent analysis on how to increase the tax-GDP ratio to 14 per cent by FY 2017-18.
As per the analysis, the tax-GDP ratio was 8.94 per cent in FY 2013-14, showing a decline from 9.0 per cent in FY 2011-12.
Tax-GDP ratio is one of the poorest in Bangladesh compared to that of other countries in South Asia. It is 15 per cent in India, 12 per cent in Pakistan, 13 per cent in Sri Lanka, 13 per cent in Nepal, 14 per cent in Bhutan. The ratio is 25 per cent in Vietnam and 18 per cent in China.
NBR chairman Ghulam Hussain said the tax-GDP ratio has declined, as the government has broadened the GDP-baseline.
He said the country has the potential to attain a 20 per cent growth in tax-revenue collection by checking leakage and tapping the sectors, vulnerable to tax evasion.
It has been found that aggregate tax collection growth also declined to 10.67 per cent in FY 2013-14, which was 19.72 per cent in FY 2011-12.
Tax collection growth was 14 per cent in the first five months of the current FY (July-Nov).
Noted economist Dr Zaid Bakht said import and investment are the two major factors for tax-revenue collection that performed less than expectation.
Dr Bakht, research director of Bangladesh Institute of Development Studies (BIDS) and chairman of Agrani bank, said there might be a shortfall in revenue collection in the current FY like the previous years, as the economy is not picking up to an expected level.
On the downward trend in revenue collection growth, he said the tax-revenue collection increased from a small base showing a higher growth on that year.
Revenue collection attained an impressive growth from FY 2007-08 to 2011-12 due to an increase in petroleum and commodity prices in the international market, import value, depreciation of taka against US dollar, implementation of Annual Development Programme (ADP), inflation, and source tax, the taxmen's analysis revealed.
Dr Bakht suggested the tax authority to look for new sources of tax-revenue by tapping the potential sectors, including household owners.


In the analysis, NBR found that it will have to increase tax-GDP by 4.21 percentage points by 2017-18 to achieve the goal.
The revenue board will have to collect an additional Tk 1.59 trillion from the current base of revenue to reach the target by that period.
Tax officials found the target as an extremely-challenging one considering the prevalent economic factors.
A senior tax official said the government has fixed the tax-revenue collection target expecting 7.3 per cent GDP growth, ADP, import growth of around 15 per cent, and improved investment scenario.
He emphasised integrated action plan for income tax, customs and Value Added Tax (VAT).
Besides, short, medium and long-term strategies would be needed to achieve the desired goal on revenue collection, he added.
Enhancing capacities of NBR, time-bound upgradation of laws, rationalizing tax rates, online TIN, logistics, infrastructure facility, human resource development, dispute settlement, expansion of tax net and reduction of tax expenditure are the major strategies to boost the tax-revenue collection, he opined.
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