NBR fears revenue shortfall on austerity measures

Income from imports shows falling trend


DOULOT AKTER MALA | Published: November 20, 2022 08:50:11 | Updated: November 20, 2022 13:27:37


NBR fears revenue shortfall on austerity measures

The revenue board has identified four policy measures that could prove barriers to achieving revenue collection targets unless effective actions are taken to offset the fallout, according to a policy paper prepared recently.

The measures are: higher import margins due to scarcity of US dollar, imposition of regulatory duty to restrict import of less important products, discouraging import of luxury goods and reduction of taxes on essential goods such as petroleum products, sugar, rice etc.

The concerns were raised in a presentation of the customs wing made before a team from the International Monetary Fund (IMF) that visited Bangladesh recently and held a meeting with the National Board of Revenue (NBR) at its premises.

The customs wing shared with the team the country's revenue growth trend, projections, future plans, automation updates and way forward of the NBR.

The NBR also pointed out four other challenges of revenue collection that included contractionary economic policies in most of the trade partners of Bangladesh.

Other challenges are: instability caused by the Russia-Ukraine war, unprecedented appreciation of the US dollar, and recession in major export destinations.

The customs wing showed the trends of goods import and revenue collection in the July-October period of 2022. Data showed the revenue collection from import of goods dropped to Tk 73.20 billion in the month of October against Tk 75.91 billion in September and Tk 80.97 billion in August.

Import volume in the month of October dropped to 11,518,313 tonnes, down by 11,580 tonnes and 180,563 tonnes against the month of September and August this year.

The government has set a Tk 3.70 trillion revenue collection target for the current fiscal year (FY 2022-23). To achieve the target, the NBR would have to collect Tk 925 billion in each of the quarters until June 30 next year.

In Q1 (July-September) of the current FY, the NBR collected Tk 671.04 billion in tax revenue, achieving 16 per cent growth against the corresponding period of last FY.

In the presentation, the NBR outlined a couple of its future plans that might also cause revenue reduction including rationalisation of supplementary duty and RD to comply with commitments for graduation from the Least Developed Country (LDC) status, rationalisation of the customs duty as committed to the World Bank, and outcome of any possible preferential trade agreement with any of the trade partners.

Officials said the IMF suggested NBR bring down the tax exemptions which would help increase the revenue collection.

On the other hand, the economists argued that the commodity prices increased substantially, facilitating the NBR to enhance its collection significantly as tax and tariff structures remained largely unadjusted.

"However, the NBR should not rely on the rising prices in an attempt to achieve its annual target," said Towfiqul Islam Khan, Senior Research Fellow at the Center for Policy Dialogue (CPD).

The tariff and tax structure should be further adjusted to give more relief to the common people who are struggling with everyday price hikes, said Mr Khan, who is also a Coordinator of the CPD's Independent Review of Bangladesh's Development (IRBD) programme.

There must be an analysis on how much the rising prices are responsible for the revenue mobilised, he suggested.

"The country is now struggling with multiple macroeconomic imbalances. Amid this, the revenue mobilisation is getting its due focus. The Ministry of Finance (MoF) has not released data on fiscal positions after May of the last fiscal year, making it difficult to review the total revenue situation," he said.

Mr Khan said the government's ability to mobilise revenue will determine its ability to support general people in terms of expanding social protection, ensuring subsidies in critical sectors such as agriculture and giving tax breaks for daily essentials.

The NBR should focus on curbing tax evasion and make sure that the taxes paid by the citizens reach the government exchequer and are well-spent, he added.

He suggested expediting implementation of the reform agenda that may contribute to the inflow of loans from the IMF and other multilateral agencies.

In the paper, the customs wing of the NBR said that introduction of more advanced technologies in data analysis could be a way forward to combat the challenges along with proper collection of duty and taxes at all customs ports and stations.

It also presented automation updates of the NBR before the IMF team.

The customs has developed interface with the Bangladesh Bank to interlink export-import data, introduced electronic payment of duty taxes, and launched a national single window and bond automation project.

The government set a Tk 1.11 trillion target in import and export duty collection for the current FY.

doulotakter11@gmail.com

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