Revenue officials are reportedly chasing people and companies aggressively to maximise collections by the year amid huge collection deficit caused by global economic crisis and nationwide shutdown in the wake of Covid-19 pandemic.
But many believe the tax authority should take a ‘benevolent approach’ in this crisis situation without going aggressive in hunting arrear taxes from companies and individuals.
“Taxmen are becoming more forceful in collecting arrear tax although we are facing teething troubles,” a business leader told The New Nation on Saturday, seeking anonymity.
He also raised the allegation that revenue officials are harassing officials and owners of many companies in the name of spot-check of their paperwork, including proof of expenses and income dating back.
“The pandemic has already wrecked havoc on the economy hitting earnings of individuals and businesses. So, most taxpayers who owe tax may not afford to pay in this situation,” Dr Ahsan Mansur, an Executive Director of Policy Research Institute, Bangladesh, told The New Nation.
He said taxmen chased taxpayers taking an aggressive approach as overall tax collection is far behind the target. They are now moving into top gear to maximise collection so that they can minimize the shortfall by end of FY 20.
The total revenue collection has been estimated to be Tk 3,77,180 crore in the FY 2019-20, Out of this, the National Board of Revenue (NBR) has been tasked to collect Tk 3,25,660 crore.
But NBR witnessed a collection shortfall of around Tk 56,000 crore in nine months (July-March) of the fiscal year forcing the government to reduce its collection target to Tk 3,00,500 crore.
However, overall revenue collection stood at Tk 1,64,140 crore up to March FY20, which is 47.2 per cent of the revised budget target (Tk 3,48,070 crore) in FY20.
NBR Tax, Non-NBR tax and Non Tax Revenue have contributed 83.1 per cent, 3.0 per cent, and 13.9 per cent of the total revenue collection respectively. A negative growth in all components except income tax and profit tax has resulted 12,1 percent decline of overall NBR tax revenue in July-March period of FY20.
At the same time, Non-NBR tax has declined by 9.2 percent while Non Tax Revenue registered 21.3 per cent growth during the period, according to the Ministry of Finance.
“Off course, we need to pay what we owe, and it’s right that NBR has some powers at hand to nudge people who are falling behind on their payments,” said NBR Chairman Dr MA Mazid adding, “It is the duty of NBR officials to ensure that the revenue collection targets were achieved.”
But meeting this goal should not a priority for the Revenue Board amid the stuttering economy, caused by Covid-19 health crisis and its containment measures, he said.
Dr MA Mazid further said that the revenue officials should show a generous approach to businesses that have been hit hardest by the government-imposed lockdown measures. “Like with any tax due, NBR should support businesses that are struggling through time-to-pay arrangements which can allow companies to delay payment of taxes until 2021,” he added.
Referring to global example, Dr MA Mazid said, many governments – including the UK and the US-have announced fiscal stimulus packages, such as tax relief, to individuals and business so that they can withstand the pandemic shocks.
Frustrated by taxmen’s aggressive approach, a taxpayers, said, “We need a NBR that people can approach honestly if they are struggling, and which will give people time and space they need in order to pay what they owe.”
“We are aware of the current situation. But whatever the situation is, efforts for achieving the target have to be continued in a strategic way,” said a senior NBR official asking not to named.
He said giving adversely affected businesses and households more time to pay taxes, the Revenue Board has already extended the deadline for submission of corporate and other tax returns until June 29.
“The current situation is not the right time for the Revenue Board to aggressively chase tax payments,” said former lead economist at World Bank’s Dhaka office adding that fiscal policy must be adjusted in line with the economic circumstances.
The department has altered its strategy to focus on helping taxpayers, both individuals and corporations said.
“It isn’t an appropriate situation to put state income on the front burner right now, so the NBR should offer delays in income tax return filing deadline to allow people to keep money in their pockets as long as possible. It should also cut tax for small and medium companies and provide them tax incentive to motivate their proprietors to continue businesses and pay their employees.”
