But falls 7.75pc short of targetJuly-Sept tax receipts post 12.63pc growth

The government’s revenue collection reached Tk 71,256 crore in the first three months of the current fiscal 2022-23. 

The amount is 12.63 percent more than the same period of the previous year’s collection of Tk 58,368 crore.

This year’s collection, however, fell Tk 5,519 crore or 7.75 percent short of the target set at Tk 65,737 for the July-September period.

The country’s economic activities have been shattered because of global inflation and ongoing Russia-Ukraine war.

It has a negative impact on local businesses. The global financial crisis is also reducing the number of incoming tourists. Due to inflation, the purchasing power of the common people has shrunk.

A senior official of the Ministry of Finance said that the government has taken several steps to protect the economy from the global crises. These included, cut in financial expenditure, ban on foreign travel by the government employees, setting priorities while implementing development projects and withdrawal of duties on several imported products.

The home economy will shrink in the near future, and growth will be affected. And, some economic indicators such as revenue generation, budget implementation, execution of development projects will not perform well. All these have led to trimming the revenue generation.

When approached, former finance adviser to a caretaker government, AB Mirza Azizul Islam, said that luxury products are being discouraged to save the hard-earned dollars. Besides, a new LC margin has been set on imports. As a result, imports are decreasing gradually. The revenue from this sector has also fallen short of the set target. However, every year the exchequer is experiencing low revenue collection.

“In order to get out of here, we need to make major reforms in the taxation sector. If necessary, a ‘Tax Commission’ should be formed. Compared to many countries in the world, tax revenue in proportion to GDP is much less in Bangladesh,” Azizul said.

He further said that due to low income, the economy is facing problems while managing costs. The size of the budget cannot be squeezed. In the meantime, the borrowing by the government is also increasing. If this goes on for too long, macroeconomic balance will be in trouble.

In Bangladesh, revenue is derived mainly from three sectors. These include revenue from the import and export sectors, local level VAT or travel tax. An analysis of the National Board of Revenue (NBR) provisional data showed that the actual revenue in those three sectors fell well off the respective targets during the July-September period.

Import and export sector: In the first three months of the current financial year, the target of revenue collection from the import and export sector stood at Tk 22,434 crore against a projected target of Tk 25,121 crore. This time, the revenue collection fell by Tk 2,687 crore. However, the growth still remains around 16.44 percent.

To help ease inflation, the government has cut import duties on rice and edible oil.

Deficiency in VAT collection at the local level: After the post-Covid era, the economy had started turning around a bit. It was when a major crisis appeared as Russia declared war against Ukraine. As this war abruptly affected the food supply chain, the rate of inflation started rising.

During these three months, VAT worth Tk 23,216 crore was collected against the target of about Tk 24,642 crore. Accordingly, the collection fell short of target by Tk 1,426 crore. However, despite the decrease in collection, the growth has been around 10.06 percent.

Adverse impact on income tax and travel: In the first three months of the current financial year, the growth in this sector has been registered by 11.55 percent, but the income tax fell by Tk 1,405 crore.

The tourism sector has also been adversely affected by the global economic crisis, along with the abnormal rise in the value of the dollar.

Apart from this, a moratorium has been put on most of foreign trips by the government employees. As a result, income tax and travel tax combined stood at Tk 20,087 crore till September against a target of Tk 21,493 crore.