While the economy was already facing stress on different fronts, the novel coronavirus (COVID-19) has turned a disquieting situation. Uncertainty in the global economy in view of COVID-19 and consequent repercussions for Bangladesh economy is already creating added pressure both from the demand side and from the supply side.
In view of the current trends in revenue collection and public expenditure, the budget deficit may increase to 5.5 per cent of GDP in FY2020. At this backdrop it will be critically important for the National Board of Revenue (NBR), Bangladesh to set its revenue mobilisation targets in a more prudent manner.
The NBR should design its proposals for tax measures considering both the mitigation urgency and the subsequent economic recovery in view of the ongoing Coronavirus pandemic. The immediate task of addressing the adverse effects COVID-19 should not deter the NBR from prioritising implementation of medium-term reform plans. It will be of crucial importance to accelerate the preparatory works to this end so that the reforms are effectively implemented at the earliest. The unfinished ongoing reform agendas including full implementation of the VAT and SD Act should be accorded the attention that the tasks deserve.
The Centre for Policy Dialogue (CPD) submitted these recommendations for the National Budget FY2020-21 to the NBR on 4 April 2020. The budget recommendations were prepared under CPD’s flagship programme Independent Review of Bangladesh’s Development (IRBD). These proposals include both sector specific suggestions and also the needed reforms and measures to raise NBR’s administrative capacity. CPD’s proposal on selected fiscal budgetary reforms and measures focus on domestic and external sectors which are under the jurisdiction of the NBR.
In the proposal, CPD highlighted some reforms as well. CPD stresses that NBR should introduce taxes for proxies for pollution by tax region as has been mentioned in the “Public Financial Management (PFM) Action Plan 2018-2023 to implement The PFM Reform Strategy 2016-2021”. This will provide NBR a new and desirable source of tax revenues.