Al Amin :
An overhauling of the country’s tax system is a crying need to fulfil the target of revenue collection when the country desperately needs more resources, economists said.
Revenue collection missed target by a big margin in 2019-20 fiscal year due to sluggish economic activities, including import slowdown, National Board of Revenue (NBR) officials sources said.
The revenue collection was short of Tk 82,000 crore from the revised target in the immediate past fiscal year. The NBR has been failing to achieve its annual tax revenue collection target since 2015.
Economists said such huge shortfall in internal revenue collection will increase the government’s budget deficit in the current FY.
Without the expected reform, it will be impossible to achieve the ambitious revenue collection target of Tk 378,000 crore for the current fiscal year, they opined.
The proposed budget has not given any clear direction as to how the projected revenue target can be materialized.
Dr Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI), said, “Budget deficit might rise to 6.5 per cent for the first time due to the revenue shortfall, unless the government cuts its expenditure by a big margin.”
Dr Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), told The New Nation, “There have been a number of reform initiatives within NBR with the objective to have a simplified, transparent, efficient and effective tax administration.”
“Some of these are Reforms in the Revenue Administration (RIRA) in 2002, Income Tax Management System in 2004, Tax Administration Capacity and Taxpayers Services (TACTS) in 2010,” she added.
“Unfortunately, most of those reform initiatives have either been discontinued or remained dysfunctional for unknown reasons,” she said.
She further said Covid-19 situation calls for introduction and initiation of reforms in the tax regime as an overhauling of the tax system is a crying need at this point when the country desperately needs more resources.
“The shortage of human resources in the NBR may also have been a reason for tax compliance and tax collections,” she said.
Primarily, the revenue collection target was Tk 3,25,600 crore and the revised target was Tk 3,00500 crore in the last fiscal year.
But the three wings of the NBR — Income Tax, Customs and VAT– were able to collect revenue Tk 2,17405 crore, which was Tk 82,093 crore less than the revised target and Tk 5,000 crore less than the 2018-19 financial year. Revenue collection was Tk 2,23462 crore with 2.26 negative growth in the previous fiscal year.
Income tax, the highest deficit sector, collected Tk 63004 crore against the target of Tk 1,06,069 crore set for the one year period. That means the sector achieved 68 per cent of the target. The collection growth in this sector is 14 per cent compared with the 2018-19 financial year.
Besides, a negative growth was also seen in Value Added Tax (VAT) and Customs. There has been a deficit of Tk 24,006 crore in the import duty sector. Tk 60,552 crore have been collected against the target of Tk 85,221 crore with 4.46 percent negative growth in the sector.
On the other hand, Tk 84,849 crore has been collected against the set target of Tk 1,08,600 crore in VAT with 2.76 per cent negative growth.
