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Revenue collection soared 8 per cent in the first nine months of the fiscal year, paced by the increased collection of advance corporate tax and higher receipts of indirect tax value-added tax (VAT).
The tax authority logged in Tk 165,007 crore between July last year and March this year, showed the preliminary data of the National Board of Revenue (NBR).
Yet, the gap between collection and target widened further as receipts from all three areas fell short of targets for the period.
The NBR sat on a shortfall of Tk 56,000 crore until March from its target of Tk 221,145 crore and the task of narrowing down the gap is likely to widen as the near-collapse of economic activities for the global coronavirus pandemic will hit overall collection.
“The performance may exacerbate in the last quarter as the country has gone into a ‘lock-down’ period,” said Towfiqul Islam Khan, a senior research fellow of the Centre for Policy Dialogue (CPD).
The independent think-tank earlier apprehended that the revenue shortfall in fiscal 2019-20 might be Tk 100,000 crore. But that was before coronavirus arrived.
“Surely the actual shortfall this year will be far greater. And the NBR may have little to do to minimise the damage,” he added.
The NBR data showed that income tax receipt grew 14 per cent year-on-year to Tk 52,910 crore from a year earlier. Yet, the taxmen could log 45 per cent of their full-year target with three-fourth the year gone.
And a senior official of Large Tax Units (LTU), the main collector of income tax for the NBR, said collection is likely to seriously suffer in April as economic activities remained shut to tackle COVID-19. There may even be negative growth.
“We have got a good amount of tax from banks and mobile operators. Besides, advance payment of corporate tax by firms also buoyed overall receipts in March.”
The arrears and tax-at-source account for most of the tax collection in the fourth quarter of the year. However, payments by firms except for salary payment is very low, he said.
The countrywide shutdown, which has now stepped into its second month, is likely to ravage collection of VAT too as the tax is paid by final consumers of goods and services.
Also known as consumption tax, VAT is the biggest source of revenue. VAT collection increased 7 per cent year-on-year to Tk 64,111 crore in the July-March period.
Revenue officials could collect more than half of their annual collection goal but remained 45 per cent below their target for the year.
The similar is true for the collection of tariffs from overseas trade, particularly from imported goods. Customs official could log just over half of their annual target as imports declined.
During the July-March period, collection of customs tariffs grew 2 per cent year-on-year to Tk 47,985 crore.
And in the face of the continuing shortfall from the heightened target of Tk 325,600 crore this fiscal year, the government revised down the goal for taxmen to Tk 300,000 crore.
Yet, the target is unlikely to be achieved given the devastation of coronavirus.
“Apparently, weakness in revenue mobilisation restrained government from extending enhanced support to the marginalised to combat COVID-19,” Khan said.
The government will need to pursue an expansionary fiscal policy and go for expanded public expenditure in fiscal 2020-21.
“The NBR’s performance will be critical in this context. While the pressure for granting tax breaks is likely to be high, raising administrative efficacy to curb tax evasion and implementation of reform agenda will hold the key,” he added.
(TDS)
