CPD warns of Tk 1.5tr revenue shortfall by FY25

Staff Reporter :

The Centre for Policy Dialogue (CPD) has warned that the revenue shortfall could reach Tk 1.5 trillion by the end of the current fiscal year (FY2024-25).

In its recommendations for the national budget of FY2025-2026, the CPD has proposed raising the tax-free income limit to Tk 4 lakh, considering the high inflation rate.

The think tank also called for budget allocations for the victims of the July uprising.

At an event on Sunday, CPD Executive Director Fahmida Khatun stated that the government’s revenue shortfall could total Tk 1,05,000 crore by the end of FY2024-25.

She pointed out that inflation has been on the rise during the July-February period, with food inflation outpacing non-food inflation.

Additionally, food inflation rates in rural areas were significantly higher than in urban areas. As a result, many people are having to dip into their savings to afford food.

“In this situation, we believe it is logical to increase the tax-free income limit. Therefore, we propose raising it to Tk 4 lakh in the next fiscal year,” Fahmida said.

The CPD executive director also expressed doubts about Bangladesh Bank’s target of reducing inflation to
7-8 per cent by the end of June, calling it an unrealistic goal.

“If the current trend of revenue mobilisation continues, the revenue shortfall could reach Tk 1,05,000 crore by the end of FY2025,” she warned.

In the current fiscal year’s budget, the tax-free income limit was set at Tk 3.5 lakh. Fahmida noted that total revenue collection recorded only a modest growth of 4.4 per cent during the July-December period of FY2025.

To meet the annual growth target of 32.2 per cent, total revenue collection would need to increase by 55.5 per cent in the remaining months of FY2025-a prospect she deemed highly unlikely