March logs second-lowest revenue growth in nine months
However, the growth during the nine months through March was above 15%
The National Board of Revenue (NBR) experienced the second-lowest growth in revenue collection in March during the first nine months of the current fiscal year, thanks to lower imports and the lack of expected momentum in the country's economy.
According to sources at the NBR, the growth in revenue collection from import tax, value-added tax (VAT), and income tax was about 13% compared to the same month of the previous fiscal year. Earlier, December recorded the lowest growth in the July-March period.
However, the growth during the nine months through March was above 15%, and some experts see this growth despite lower imports and a slower-than-expected pace in the local economy as positive.
"Given the current economic reality, this growth is not bad," Ahsan H Mansur, executive director of the Policy Research Institute (PRI), told The Business Standard.
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He sees no achievement of the NBR but rather considers the significant depreciation of the exchange rate of the taka and high inflation at the local level as major reasons behind this.
"Due to the exchange rate, the value of imported goods has increased, which has led to a higher import tax. Additionally, because of inflation in the local market, additional VAT has been collected," added the economist.
An analysis of import data from the Bangladesh Bank and revenue data from the NBR also supports this conclusion.
According to the latest data released by the central bank, settlements of import letters of credit (LC) decreased by about 15% from July to February. On the other hand, import tax collection from July to March increased by over 10%.
Data from the Bangladesh Bureau of Statistics (BBS) indicates that inflation was close to 10% last year. Due to high inflation, consumers have to spend more, a portion of which is received by the government as VAT and taxes.
According to NBR data, the average growth in March was 13%, but the growth in import tax collection was slightly more than 6%. The growth in VAT and income tax collection has been around 14% and 17%, respectively.
More than 80% of imports come through the Chattogram Port, which is handled by the Chittagong Custom House.
Explaining the reason for the slow growth in import tax, Chittagong Customs House Commissioner Mohammad Fyzur Rahman told TBS, "Imports decreased by 14% in March. In particular, car imports fell, a sector with high import duties. The prices of steel products have come down in the international market."
"Furthermore, there was a prolonged New Year holiday in China, leading to a drop in LC openings, which impacted revenue collection in March," he said, adding, "Imports decreased due to these reasons. Despite that, the growth of the customs house was around 12%."
On the other hand, a senior officer of the NBR told TBS, explaining the reason for the decrease in March despite the good growth in VAT collection in the previous two months, "The deadline to submit the VAT return is by the 15th of the next month. But due to the Eid holiday this month, it has been disrupted, causing a slight decrease in collection."
"But it will be fixed in the next month," he added.
Muhammad Abdul Mazid, former chairman of NBR, is not satisfied with the growth in revenue.
He told TBS, "There is a huge amount of non-performing loans in the banking sector. Again, the capital market is not functioning as expected. Consequently, the anticipated revenue is not materialising from these sectors."
"NBR is not implementing the kind of reforms needed for revenue collection. As a result, even if there is a large revenue target in the coming months, it will be difficult to achieve," he said.
At the beginning of the current financial year, NBR's revenue collection target was Tk4.30 lakh crore. However, due to a lack of expected pace in collection, it has now been revised down by Tk20,000 crore.
According to NBR calculations, the revenue shortfall in the first nine months of the fiscal year compared to the target is about Tk22,000 crore.
NBR sources indicate that in the last nine months, around Tk2.60 lakh crore has been collected against a target of nearly Tk2.82 lakh crore. Therefore, the monthly collection during this period averaged less than Tk29,000 crore.
Even to achieve the reduced target, an average of more than Tk50,000 crore will need to be collected every month for the next three months.
Abdul Mazid believes that NBR has been given targets that exceed its capacity, which are not realistically achievable.
According to NBR data, the average growth in revenue collection in the last five fiscal years was below 11%. Compared to that, the growth in the current financial year is better.
However, despite this growth, Ahsan H Mansur believes that the revenue may fall short by Tk35,000 crore of the revised-down target in the next financial year.
According to sources at the NBR, its Chairman Abu Hena Md Rahmatul Muneem held a meeting with field-level officials at the NBR building on Monday to review the revenue collection situation.
An officer present at the meeting told TBS, "The officials have been instructed to increase monitoring to close loopholes and to collect the revenue stuck in cases."
