Forecasting that revenue collection shortfall might reach Tk 1 lakh crore in the current fiscal year, the Centre for Policy Dialogue in its budget proposal has recommended the National Board of Revenue to design the tax measures for 2020-2021 taking economic recession due to ongoing coronavirus pandemic under active consideration. The CPD also suggested that primary focus of the NBR should be on strengthening monitoring to curb tax evasion and illicit financial flows. The think tank believes it would be difficult to raise tax rates and expand the tax net this year. So, it advised the NBR to revisit its current fiscal incentives with a view to restructuring the system. This time, the revenue board will need to avoid overambitious revenue collection target while macroeconomic sectors are likely face a big blow.
Making a number of budget proposals for various affected sectors and individuals, the NBR was also advised by CPD to offer a number of benefits including reduction in VAT rate and deferred payment of quarterly advance income tax for manufacturing, travel and tourism sectors. In fact, the global economy – not only in Bangladesh – will have to face an adverse impact due to attack of coronavirus. After the epidemic has turned into pandemic with spreading every corner of the globe, massive supply shortages are expected to affect most of the world’s economies following people’s panic buying when factories facing disruption due to inadequate supply of logistics. In this situation, the CPD suggested to allow payment of corporate income tax in instalments. Side by side, it urged the government to provide low-interest credit facility to farmers before the next planting season. The think tank has also recommended to increase tax-free income limit for individual taxpayers to Tk 3.5 lakh from current Tk 2.5 lakh.
We find some proposals of CPD are quite pragmatic. But one thing which was supposed to be taken with high importance — that is proposing the revenue board not to bring lower and middle-income group people under its tax-net for certain period who are now going through a very difficult situation due to coronavirus pandemic. It will be very difficult for them to heal their financial wounds even if they survive the pandemic.
