Published in The Financial Express on Thursday, 7 May 2015.
Slower investment, development drag down govt’s tax collection
Doulot Akter Mala
Government’s tax-revenue collection fell short of its aggregate target by Tk 42.71 billion in the first nine months of the current fiscal year (FY), largely due to slowdown in investment and development activities.
The National Board of Revenue (NBR) tapped in an aggregate amount of Tk 927.29 billion as revenue during the July-March period of the current FY against its target of Tk 970 billion, officials said.
Tax officials said implementation of the Annual Development Programme (ADP) was poor in the three quarters under consideration that largely affected the tax-revenue collection. Government agencies spent only 43 per cent of the current year’s ADP allocation in that period.
Both local and foreign investments have witnessed an unrelenting decline for the third consecutive year in FY2014-15.
Private investment should be raised by Tk 750 billion in the current FY to achieve the desired 7.3 per cent GDP growth, according to an analysis by the private think-tank Centre for Policy Dialogue (CPD).
Tax officials noted that the finance minister recently said the GDP growth would be close to seven percent this year. The government fixed the tax-revenue target at Tk 1.49 trillion concomitant with a 7.3 per cent GDP growth.
Proper implementation of the ADP, import growth around 15 per cent and an improved investment scenario from both local and foreign investors were envisaged in setting the targets, they said.
Although the government recently slimmed down the original aggregate target of tax collection to Tk 1.35 trillion from Tk 1.49 trillion for FY2014-15, it is yet to be officially announced by the revenue board.
As per the revised one, the NBR will have to collect aggregate Tk 422.71 billion in revenue in April-June period to get to the target.
CPD research fellow Towfiqul Islam Khan said the NBR may face Tk 250 billion shortfall in tax-revenue collection in the current FY.
“The target for tax collection has been set ambitiously. The target has been set expecting nearly 25 per cent growth that is not feasible,” he said.
Economic situation hit by political turmoil is the other prime reason for the estimated shortfall in revenue collection, he noted.
In the July-March period, the tax authority has achieved 16.67 per cent growth in revenue collection compared to that of the corresponding period last year.
Of the three NBR wings, income-tax department achieved the highest growth at 19 per cent followed by VAT 16.67 per cent and customs wing 14.68 per cent.
The government set the tax-revenue-collection target for the current fiscal year expecting some 22 per cent growth despite the revenue board having missed its target for tax collection for three consecutive years.
For the upcoming financial year, the government has set an aggregate target Tk 1.76 trillion for tax revenue.
Import-revenue collection faced a blow due to decline in international oil and commodity prices, appreciation of the taka against the US dollar, an NBR official said.
The income-tax wing collected Tk 305 billion while VAT Tk 350 billion and customs Tk 269 billion in the first nine months of FY2014-15, according to official data available with the NBR.