Govt catapults revenue target to Tk 6.95t to achieve lofty ends

An elevated target of collecting Tk 6.95 trillion as revenue has been set for the upcoming fiscal year to achieve new government's lofty budgetary ends like enhancing GDP growth, taming wayward inflation and advancing the economy towards a trillion-dollar mark.
The total sum of revenue for financial year 2026-27 is up 23.23 per cent from the original one for the current fiscal, officials say.
The target is attuned to raising the tax-to-GDP ratio to 9.21 per cent.
The tax-GDP-ratio target was set by the International Monetary Fund (IMF) against its budget-support credit package for Bangladesh.
Of the revenue, the National Board of Revenue (NBR) will have to collect Tk 6.04 trillion in taxes, expecting a 21.04-percent growth over the current year's original targets.
According to finance officials, the revenue-earning target has been approved by the committee for coordination on fiscal, monetary, and currency exchange, held recently to finalise the size of the next budget.
The total revenue-collection target is 18.2-percent higher than the revised budget for the current fiscal year while the target for the NBR is up by 20.1 per cent than that of the revised target under current budget.
The post-uprising interim government had increased the revenue target by Tk 40 billion for the first time in the current fiscal year.
Talking to The Financial Express, a senior official of the NBR has said value-added tax (VAT) collection receipts will be the major source of revenue in the upcoming fiscal year like this year.
However, revenue share of the VAT wing has been projected 51.3 per cent of the total NBR target for next year.
The government targets Tk 3.10 trillion VAT in FY 2026-27 followed by Tk 2.22 trillion from income tax and Tk 670 million from customs wing.
"The share of customs wing would be only 11.1 per cent in the next year as import-stage VAT is set to be added to VAT-collection data instead of customs data," the official says.
A national taskforce report on tax-policy development has put major emphasis on raising the tax-to-GDP ratio to around 18-20 per cent by FY 2035, a level consistent with Bangladesh's taxable capacity as a country approaching upper-middle-income economy.
"Rebalancing the tax structure toward direct taxes and VAT, a central pillar of the reform strategy, is a decisive shift toward domestic taxes -- direct taxes and VAT," the report reads.
The report envisions a medium-term restructuring in which direct and indirect taxes each contributes roughly half of total revenue, compared to the current 33:67 split.
Personal Income Tax (PIT), Corporate Income Tax (CIT), and property-related taxes are expected to rise from about 2.5 per cent of GDP now to around 9-10 per cent by FY 2035.
This shift is deemed essential not only for revenue adequacy but also for equity, as indirect taxes disproportionately burden lower-income households.
Of the revenue target for next FY, the target for non-NBR tax has been set at Tk 250 billion and non-tax revenue Tk 660 billion.
In a note to the coordination council, the Ministry of Finance (MoF) has written the government has to increase revenue mobilisation at proportionate rate of operating expenditure and development expenditure to reduce dependence on borrowing from domestic and external sources.
Until February, the NBR had collected Tk 2.51 trillion worth of revenue, nearly 50 per cent of the revised target of Tk 5.03 trillion.
Economist Dr Selim Jahan, professor at the University of Dhaka and a former director of the Human Development Report Office under the United Nations Development Programme, suggests the government should set an achievable revenue target and increase it in phases.
"The government must adopt a contractionary budget this year considering the global economic turmoil centering Middle-east war," he says to underscore the need for austerity in taking development projects.
"Currently, tax to GDP ratio is 6.9 per cent. The target for next FY 9.21 per cent looks ambitious," he said.
Tax to GDP target 7.5 per cent could be an achievable one for next FY, he added.

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