Wednesday, August 12, 2020

Shortfall in revenue collection continues

Al Amin :
Revenue collection deficit from the target widened further in July, the first month of the current fiscal year, blaming the country's slowed economy caused by the ongoing Covid-19 pandemic.
The revenue collection witnessed a deficit of Tk 7043.77 crore against the target of Tk 19378.27 crore in the first month of the 2020-2021 Fiscal Year. The National Board of Revenue (NBR) collected Tk 12334.97 crore.
Against this backdrop, the government has become dependent on high bank borrowing to meet operational costs as well as implement of the development budget. The government has already borrowed Tk 8288 crore from commercial banks in the first 26 days of the new Fiscal Year.
The NBR officials of the revenue authorities blamed a high target, tax exemption for a number of goods and a slowdown in business activities in the country for the deficit.
Economists, however, said that the weakness of the system of revenue collection was also responsible for the revenue shortfall.
Abdul Mazid, former chairman of the NBR, told The New Nation, "Pandemic is one of the reasons behind the big shortfall in revenue collection in the first month. But it is not only and one reason."
"NBR wanted to turn the revenue collection procedure into online. But the procedure is yet to be completed. It is another reason for shortfall," he added.
Revenue collection from value-added tax (VAT), the biggest source of revenue for the state coffer, missed the target by Tk 548.74 crore against the target of Tk 7732.38 crore. The NBR collected Tk 3735.68 crore from the source.
Earning from the customs duty were Tk 4929.03 crore against the target of Tk 7427.36 crore and the gap between target and collection was Tk 2498.33 crore on the back of a crash in imports.
Receipt from income and travel tax was Tk 3670.26 against the target Tk 4219 and the deficit between the collection and target was Tk 548.74 crore.
 "The economic downturn caused by the pandemic was the main but not the only reason," Zahid Hussain, a former lead economist of the World Bank office in Dhaka.
"A low revenue collection has posed negative impacts on the implementation of the national budget. The government has already borrowed more than its target from the banking sector to implement the Annual Development Programme (ADP)," he added.
The pandemic caused income losses for the poor, the middle-class and the rich alike. The poor and the low-income groups had to adjust their expenditures because they have little savings to draw from.
Even those whose income was not hit cut back on expenditures because they restricted themselves to staying at home. Overall, private consumption expenditure was hit badly leading to the fall in VAT collection.
However, revenue collection was weak even before the pandemic arrived on the shores of Bangladesh.