Big shortfall in tax receipt likely this FY

Al Amin :
The country may see a big shortfall in revenue collection at the end of the current fiscal year (2022-23), despite tax earnings have rebounded in May.
Revenue collection by the National Board of Revenue (NBR) grew in May buoyed by earnings from customs duty and income tax, according to a provisional data of the NBR.
The revenue board earned Tk 32,122.16 crore registering 28.65 per cent year-on-year growth in May, the provisional data showed. The public exchequer fetched Tk 24,968.33 crore in the same period of last fiscal year.

With the recovery in collection last month after a fall in April, the overall revenue receipts stood at Tk 282,416 crore posting 9.22 per cent year-on-year growth, which means the NBR will have to collect around Tk 87,000 crore in June to meet its annual target of Tk 370,000 crore.

“That means there will a big shortfall from the target. NBR will be able to earn a maximum of Tk 320,000 crore this fiscal year,” Dr M A Razzaque, Chairman of RAPID, told The New Nation.
If so, this would be the 11th consecutive year the NBR would miss the tax collection targets set by the government, data from the finance ministry showed.
As per the provisional data, NBR collected Tk 83,647.86 crore with 4 per cent year-on-year growth customs wing, Tk 109,809.56 crore with 15.40 per cent growth from Value-Added Tax (VAT) wing and Tk 88,959.50 crore with 7.20 per cent growth from income tax wing during the 11-month (July to May) period of the current fiscal year.

NBR officials said collection of tax deducted at source as well as arrears increased last month, buoying the growth of income tax receipts.
A section of businesses also imported an increased amount of goods ahead of June in anticipation that customs duty may rise in the next fiscal year.
“Subsequently, we saw a pickup in revenue collection from exports and imports,” said Dr Syed Aminul Karim, former member of the NBR.
Dr Razzaque said it has become vital for revenue collection to increase to bear the government’s expenses along with subsidies.
“The subsidies requirement will increase if taka depreciates further,” he said,

citing how the government will need to arrange an additional Tk 476 crore as subsidies for the power sector if it takes just Tk 1 more to purchase each US dollar.
“This requirement cannot be met with the current pace of revenue collection. There is a possibility of further depreciation of taka after the market-based exchange rate takes effect. So, the need for subsidies to be paid by local currencies is likely to go up,” Razzaque added.

Still, the prospect of a surge in revenue collection is not that bright.
“Imports have already declined because of economic crisis. So, there will be lack of dynamism in the economy in the next fiscal year. Revenue collection will be extremely difficult in the coming days,” he added.