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Revenue collection by the National Board of Revenue (NBR) witnessed robust growth of 21 per cent in the July-August period of the current fiscal year thanks to the devaluation of taka, high inflationary pressure and expansion of the economy.
As such, the NBR has collected Tk 40,270 crore from income tax, value added tax (VAT) and customs duty in the first two months of fiscal 2022-23, according to official documents.
Revenue collection by the NBR had grown by some 14.49 per cent during the same period last year.
In an extraordinary move, the government had offered holders of undisclosed income amnesty for bringing back their laundered money back to the country by paying 7 per cent tax. However, there was no response in this regard over the past two months, NBR officials say.
The increased growth in collection is a result of the government’s budgetary measures for the ongoing fiscal year, according to an official of the finance ministry.
Besides, the country’s economic recovery from Covid-19 has also contributed to the growth, he added.
Various economists termed the rise in tax collection as “good” but also “challenging” for the NBR to fulfil this year’s revenue target.
Dr Ahsan H Mansur, an economist and executive director of the Policy Research Institute of Bangladesh, termed it as a mixed scenario.
“There is no doubt that it is good news for our economy but whether such growth can be maintained is the real issue,” he said.
The economist credited the country’s economic expansion following the coronavirus pandemic, increased inflation and devaluation of the local currency for the rise in revenue collection.
However, he fears uncertainly over the country’s economy due to high inflation and subsequently lower purchasing power of the general public may ultimately hamper future prospects in this regard.
He then explained that revenue collection usually grows in times of inflation but only nominally.
Meanwhile, import duties have increased due to the devaluation of taka.
According to Bangladesh Bank, the local currency’s value has fallen by some 25 per cent in the past year.
Asked whether the scope for amnesty provided to holders of undisclosed income could positively impact revenue collection, Mansur said it would not be very effective to this end.
Muhammad Abdul Majid, former chairman of the NBR, agreed that inflation is a major cause for the increase in tax collection.
“But we cannot understand the economy’s progress just from two month’s growth. Usually, the figure of July is adjusted with the previous month’s transactions. So, the figures are not exactly correct,” he said.
“The performance of August is good but if we consider the components of revenue collection, VAT submissions were higher due to inflation,” Majid added.
As for other components, it cannot be gauged from higher income tax collection in the past two months whether this growth is positive or not as it will be complied in the October-November period.
“So, it should not be talked about before then,” he said.
The revenue collection target for fiscal 2022-23 was set at Tk 3,70,000 crore, which is 12.12 per cent higher than what it was the previous year. In fiscal 2021-22, overall revenue collection was Tk 3,00,000 crore, according to NBR sources.
(TDS)
