Revenue collection deficit widens amid economic uncertainty

Al Amin :
The National Board of Revenue (NBR) is failing to bring pace in internal resource mobilization due to the economic uncertainty due to political unrest, slowed economic activities, import restriction and higher inflation.

The tax administration was able to collect Tk 102,445 crore with 12.68 per cent year-on-year growth in July-October, the first four months of the current fiscal year of 2023-24, despite higher income tax growth.

The revenue board fetched Tk Tk 90,917 crore with 14 per cent growth in the corresponding period of the last fiscal year, according to provisional data of the NBR.

The provisional data also showed that the NBR achieved only 8 per cent year-on-year collection growth in last month (October).

During the four-month period, the target for revenue collection was Tk 116,294 crore, meaning there was a deficit of Tk 13,849 crore.

NBR officials said the business sector enduring a sluggish period due to the foreign exchange crisis was the prime reason for the relatively slower growth.

Besides, the Bangladesh Bank has adopted a contractionary monetary policy, resulting in credit growth also slowing down, and a drop in government expenditure due to austerity measures amid macroeconomic pressure.

These are affecting the revenue collection growth, they added.

They also apprehended that the revenue collection may slow further as businesses are being squeezed by political unrest ahead of the national elections.

Dr Zahid Hussain, a former lead economist of the World Bank’s Dhaka office, told The New Nation, “A standstill situation is prevailing in the country’s economy. Import dropped 25 per cent, which affected production.

People are losing purchasing power due to higher inflation. Under the circumstances, the 12 per cent revenue collection is still a positive sign.”

He, however, apprehended that it will be challenging for the NBR to maintain the current growth in coming months, if the political unrest prolongs.

According to the provisional data, the revenue board earned Tk 31,259 crore with 16.71 per cent growth from the Income Tax wing during the July-October period.

In the same period, local VAT collection rose 12.39 per cent to Tk 38,432 crore while tax collection from imports and exports advanced 9.41 per cent to Tk 32,753 crore.