Although the government resumed economic activities in the beginning of July, no sectors have provided desired results so far. Despite the opening of offices and other institutions, the wheel of economy has yet to move forward.
The scenario of revenue collection exemplifies this.
The National Board of Revenue (NBR) has lagged in its revenue collection target by about 37 percent in the first month of this financial year. The target for revenue collection in July was set at Tk19,378 crore, while the actual realisation of the revenue was Tk12,334 crore.
Meanwhile, despite the target of 10 percent growth in revenue collection in the financial year, the NBR has lagged far behind in the first month as well.
Instead of growth, the revenue collection body has seen negative growth of 22.07 percent compared to the same period last year.
However, the growth in revenue collection during the same period last year was 15.43 percent.
NBR officials say that revenue collection has declined as the economy has opened up but people lack the ability to pay taxes.
Additionally, VAT collection has dropped because of the lower purchasing capacity of people, they added.
Mohammad Abdul Mazid, former NBR chairman said that revenue collection declines for the lack of reforms than the outbreak of the novel coronavirus.
“Coronavirus alone cannot be held responsible for the huge deficit compared to the target in the first month. The target was set from the plan to make the revenue collection process online. The NBR has failed to complete reforms,” he said.
Additionally, the revenue officials must make adjustments in July as they collect advance revenue in June. Therefore, NBR is far behind the target, believes Mazid.
According to the Ministry of Finance, the VAT sector had the worst performance in revenue collection in the first month.
Against the target of Tk7,732 crore in this sector, only Tk3,735 crore has been realised. The target achievement rate was only 2.90 percent.
The sector has seen negative growth of about 40 percent compared to the same period of the last year.
However, the government has declared the VAT sector the main source of revenue by targeting automation.
The situation in the income tax sector is as fragile as VAT because of the income decline on an individual level. Despite setting a target of only Tk4,219 crore, the sector has realised Tk550 crore less than the target.
Compared to the same period last year, the negative growth in this sector is about 16 percent.
Although it is a small sector in terms of annual revenue collection, the customs duty saw satisfactory collection in July.
In the last month, the NBR has received duties of Tk4,929 crore in this sector. However, the institution is 7.02 percent behind the target compared to last year.
A customs commissioner, seeking anonymity, said customs houses had done better here than other sectors as some products of previous orders were imported in July.
Mirza Azizul Islam, a former adviser to the caretaker government, said the government has resumed its economic activities but failed to meet its revenue targets.
“NBR has been in deficit for the last few years. As the implementation of the budget is low, the issue does not grow. This time, too, there will be a deficit. In the current financial year, the government has to spend regardless of its earnings. Consequently, the deficit will be noticeable,” he said.
To achieve the target, the NBR needs to go into full automation, added the former caretaker government adviser.
Though the entire economy has come to a standstill because of the pandemic, the NBR received a target of Tk330,000 crore in the 2020-21 fiscal year with a target of about 33 percent growth compared to last year.
Of this, a maximum target of Tk128,873 crore has been set for the VAT sector. Additionally, a target of Tk105,475 crore has been set in the income tax sector and Tk95,852 crore in the customs sector.
