Setting up of a revenue commission is the need of the hour

Dr. S M Jahangir Alam :

Our country never achieves the target of revenue collection. 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 information exchange in inter-tax management, shortage of skilled manpower and lack of necessary facilities including physical infrastructure.

Each year a high level target of revenue collection is given in the budget.

But at the end of the year it is seen that NBR 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.

The deficit is only getting bigger than the revenue collection target in the current financial year.

The gap may even be larger than initially thought. Economists fear that it may reach 40 thousand crores by the end of the year. Sources related to the National Board of Revenue (NBR) said that in the first 9 months of the current fiscal year 2022-23 (July-March), the shortfall in revenue collection compared to the target is about Tk 28 thousand crore.

If this deficit increases, it may become a serious challenge for the government in managing the overall economy, because in the first seven months of the current financial year, the bank loan taken by the government has increased four times compared to the same period of the previous financial year.

Besides, if the expected pace of revenue collection does not materialize – it will not be possible for Bangladesh to raise the tax-GDP ratio (revenue contribution to GDP) in line with the condition of getting the next installment of the International Monetary Fund (IMF) loan of $4.7 billion.

“Looking at the growth in revenue collection, it seems that there may be a shortfall of around Rs 40,000 crore at the end of the year compared to the target.”

With the tax structure, it will not be possible for the NBR to raise the 0.5 percent tax-to-DGP ratio as per the IMF’s terms. Some reforms may take three to four years to bear fruit’.

Although revenue collection has been on the decline in the last few months, the overall growth in March was close to 9 percent. But, a review of last year’s revenue collection statistics of NBR shows that this growth was almost double the current one during the same period last year.

Mainly, several initiatives of the government to control imports and the lack of expected momentum in the local economy are the main reasons behind the decline in revenue collection.

According to NBR sources, in the first nine months of the current financial year, import duty collection has increased by 3.45 percent over the same period last year, which was over 20 percent in the same period last year.

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 reduced and the target set at 3 lakh 1 thousand crores. In contrast, the amount of revenue collection under NBR was 2 lakh 60 Thousands of crores of takas. According to that, the revenue base is 41 thousand crores.

The main target of revenue collection announced in the budget must be achieved.

Automation of management, ensuring transparency and accountability at all levels and maintaining the momentum of tax administration are the 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. In the current financial year, 1 lakh 25 thousand crore taka have been financed in the base budget through the savings scheme.

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 pace 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 crores. Out of this, only 17 and a half to 18 lakh pay 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.

It 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 non-tax revenue is only 2.6 percent.

Most of the revenue under the National Board of Revenue comes from Value Added Tax (VAT). And the tendency of this van evasion is more than all. Businessmen are evading thousands of takas every year.

On the other hand, there is a trend of not paying revenue or income tax There is non-payment of taxes has become commonplace among big taxpayers.

It is worth noting that the big taxpayers are struggling to pay 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 crores.

Non-payment of tax by big individuals or organizations, tax evasion, and revenue evasion are on the rise.

This is not positive for the country. Tax payers in the world’s developed countries 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 people.

The Board is also said to be in trouble due to manpower crisis. In many cases the National Board of Revenue has limitations, as the Board is directly under the government or finance ministry.

In such a situation, formation of a revenue commission has become the need of the hour to reform the taxation system.

(The writer, a Bir Muktijoddha, is former Tax Commissioner and Director-Bangladesh
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