Formation of Revenue Commission is the need of the hour

Dr. SM Jahangir Alam :
Bangladesh is the most lagging behind in revenue collection among South Asian countries. In the five fiscal years from 2012-13 to 2016-17, the average revenue collection of the total GDP of Bangladesh is 10.4 percent. And in this period, Nepal is the most advanced in revenue collection. The average revenue collection rate of Nepal from 2012-13 to 2016-17 is 22.1 percent. These data were obtained from the World Economic Outlook published in 2018 by the International Monetary Fund (IMF). It is also said that Nepal is in the first position in collecting revenue in these five financial years. During this period, Nepal collected an average of 22.1 percent of revenue.
At this time, India collected an average of 20.1 percent revenue and was in the second position. Pakistan is in the third position. The country collected 14.9 percent revenue during that period. Sri Lanka is in the fourth position. At this time, the country’s revenue collection rate is 13 percent. And Bangladesh in the fifth position. The revenue collection rate of Nepal in 2012-13 fiscal year is 19.6 percent, 20.4 percent in 2013-14 fiscal year, 20.8 percent in 2014-15 fiscal year, 23.4 percent in 2015-16 fiscal year and 26.3 percent in 2016-17 fiscal year. Budget revenue targets are not met in any year. The authorities mentioned five reasons behind this.
The reasons are – high targets, systematic lack of coordination and procrastination in survey activities in case of extension of tax range, inadequacy of exchange of information in internal management, shortage of skilled manpower and lack of necessary facilities including physical infrastructure. Every year a high target of revenue collection is given in the budget. But at the end of the year it is seen that he is not able to achieve the target within the stipulated time. The target is then revised and reduced. The National Board of Revenue (NBR) cannot collect that either. The Inland Revenue Department (IRD) of the Finance Ministry has termed this high revenue collection target as a problem. According to the information of IRD, in the financial year 2019-2020, 2 lakh 18 thousand 406 crore 5 lakh taka, in the financial year 2020-2021, 2 lakh 59 thousand 882 crore taka has been collected.
In the first 9 months of the latest fiscal year 2021-2022 (July 2021-March 2022), the amount of revenue collection is 1 lakh 99 thousand 666 crore 49 lakh taka. The target of revenue collection in the current financial year was Tk 3 lakh 30 thousand crores. In the original budget of the last fiscal year 2020-2021, the target of revenue collection under the jurisdiction of the Board of Revenue (NBR) was 3 lakh 30 thousand crores. In the revised budget, it has been cut and the target set at 3 lakh 1 thousand crores. In contrast, the amount of revenue collection under NBR was Tk 2 lakh 60 thousand crores. According to that, the revenue deficit is 41 thousand crore rupees. Earlier, in the revised budget for the fiscal year 2019-20, the revised revenue collection target was Tk 3 lakh 13 thousand 67 crore (NBR Tk 3,00,500 crore and Non-NBR Tk 12,567 crore).
According to the Finance Department, against this, the total revenue collected was Tk 1 lakh 68 thousand 677 crore. In FY 2018-2019, against the revised target of Tk 2,89,600 crore (NBR Tk 2,80,000 crore and non-NBR Tk 9,600 crore), revenue collection was Tk 2,25,958 crore (NBR Rs 2,18,616 crore and Non-NBR Rs 7,342 crore). Achieving the main target of revenue collection announced in the budget. Automation of management, ensuring transparency and accountability at all levels and maintaining the momentum of tax administration in the global context of the Covid-19 pandemic are challenges. But according to the agency, the tax-GDP ratio has increased. In the last fiscal year 2019-2020, the tax-GDP ratio was 8.5. In FY 2020-2021 it has increased to 8.63. In the last financial year 2021-2022, the tax-GDP ratio further increased to 9.29. 1 lakh 25 thousand crores have been financed in the deficit budget through the savings scheme in the current financial year. 50 thousand 30 crore revenue collection in automated system. IRD has set a target of completing the registration of 4,500 deducting authorities in 7,000 EFD/SDC and e-TDS system. GDP in Bangladesh was 26.60 percent. If we look at the five years before 2020, it will be seen that the revenue collection environment in Bangladesh is very fragile compared to other neighboring countries. Nepal is a small country. It is also far ahead of Bangladesh in revenue GDP. For example, in 2019, the rate of tax GDP in Nepal was 26.02 percent, while in Bangladesh it was 9.9 percent. It was 19.06 percent in India, 14.07 percent in Pakistan. The average revenue growth rate of developing countries was 25.06 percent in 2020, 25.03 percent in 2019, 26.01 percent in 2018. However, the growth in the revenue sector of Bangladesh is increasing but not at the expected pace.
According to sources from the Ministry of Finance, the growth in the revenue sector reached 14 percent in the fiscal year 2018-19, but due to Corona, it came down to 4.02 percent in a shock in the fiscal year 2019-20. The present government has announced Vision 2041. The Roadmap of Vision 2041 has been prepared with the aim of becoming a developed country. It has also been said to bring massive changes in economic management for the next 20 years. Annual GDP growth at that time was set at 9.9 percent, and the tax GDP target was set at 17 percent. In such a situation, the speed of revenue collection must be increased. On the other hand, achieving the Sustainable Development Goals (SDGs) requires an additional investment of 2.5 trillion globally by 2030. And Bangladesh needs 928 billion dollars. That means an additional investment of 60 billion dollars will be required every year. To ensure this massive investment, comprehensive reforms in the revenue sector need to increase revenue. Not only that, the efficiency of project implementation should be increased, regional cooperation should also be increased.
The current population of Bangladesh is about 17 crore. And out of this, only 22.5 to 24 lakhs pay as income tax. According to the National Board of Revenue survey, about one crore people are able to pay income tax. A large number of people are still out of the tax reach. Note that the main source of government income in our country is the revenue sector. And that comes through the National Board of Revenue. In the current fiscal year, the revenue receipt from the National Board of Revenue is estimated at 58 percent and the revenue from the non-tax sector is only 2.6 percent. Most of the revenue under the National Board of Revenue comes from Value Added Tax (VAT). And this VAT evasion trend is high. Every year thousands of crores of rupees have been evaded by traders. On the other hand, there is a trend of not paying revenue or income tax. Among the able taxpayers Not paying taxes has become a trivial matter. It is worth noting that the big tax payers make various arguments in paying taxes, at one point they resorted to court. According to the latest available data, the number of revenue related cases in the High Court is more than 9 thousand against which the revenue amount is about 245 thousand crore. Non-payment of tax by able-bodied individuals or organizations, tax evasion, and revenue evasion are on the rise. This is not positive for the country. Taxpayers in developed countries of the world or in neighboring less developed countries voluntarily or voluntarily pay taxes. They consider paying taxes as a civic duty. They also think that giving revenue to the government is an honorable thing. The National Board of Revenue takes various steps to increase revenue and also takes various initiatives to pay taxes to taxpayers.
But the board also has some legal complications. Because of which the Revenue Board may not take many necessary and timely steps even if it wants to. They cannot even take proper legal action against tax evaders due to their legal limitations. In the face of manpower crunch, the National Board of Revenue cannot recruit the required manpower. According to revenue board sources, they need more than 10,000 manpower which has been informed to the higher levels of the government.

(Author: Bir Muktijoddha, Former Tax Commissioner and Director – Bangladesh Satellite Co. Ltd.)