Tax collection deficit reaches Tk 167.99b
Aggregate shortfall in tax revenue collection against the target widened further, marking a deficit amounting to Tk 167.99 billion in the first four months of the current fiscal year (FY), 2018-19, reports The Financial Express. The shortfall was about Tk 114 billion in the first quarter (July-September) of FY 19. According to the provisional statistics of the National Board of Revenue (NBR), released on Tuesday, deficit in tax revenue collection was Tk 53.69 billion in October alone. NBR collected Tk 621.29 billion tax in July-October period against its target of Tk 789.28 billion.
However, the aggregate tax revenue collection posted 6.28 per cent growth in the first four months of the current FY compared to that of the corresponding period last year.
Tax revenue collection growth was 17.34 per cent in the July-October period last year.
Experts and tax officials said setting an ambitious target, plenty of tax exemptions, and investors’ wait-and-see approach ahead of the national election are mainly responsible for the widening shortfall in tax revenue collection.
Dr Mustafa K Mujeri, an economist and Executive Director of Inclusive Finance and Development (InM), said the widening shortfall may leave multiple impacts on the economy, creating an uncertainty over achieving 7.8 per cent GDP (Gross Domestic Product) growth this year.
“The government’s development expenditure is currently low because of the election, but it needs to be geared up in the second half.”
Although the revenue target has been set in an ‘over optimistic way’ because of the election, growth in tax revenue collection has to be recovered in the second half, he said.
Mr Mujeri, however, termed the large amount of tax exemption in recent times as ‘populist’ and ‘election measures’.
The large shortfall in tax revenue collection will force the government to opt for costly borrowing from savings certificates to carry out development expenditure, he added.
In July-October period, the three wings of NBR – Income Tax, Value Added Tax (VAT) and Customs – missed their targets by 18.55 per cent, 23.91 per cent and 20.28 per cent respectively.
Shortfall in VAT collection stood at the highest of Tk 76.39 billion, and it posted the lowest growth of 2.11 per cent against the corresponding period.
Customs duty collection fell short of the target by Tk 52.48 billion, and income tax collection by Tk 39.12 billion.
In July-October, Income Tax Wing collected Tk 171.82 billion, followed by VAT Wing Tk 242.15 billion, and Customs Wing Tk 206.32 billion.
The government has set Tk 2.96 trillion revenue collection target for NBR in FY 2018-19, projecting 44 per cent growth over the corresponding period.
According to the NBR data, its average revenue collection growth in the last five years was 13.64 per cent.
A senior tax official said some large revenue contributors got tax exemption this year, raising concern of the taxmen over significant shortfall in tax revenue collection.
VAT exemption for gas sector will cause Tk 110 billion loss alone to the public exchequer, he said.
Recently, the apparel exporters also got VAT exemption in four types of services.
Earlier, NBR lowered at-source tax rate for the exporters to 0.60 per cent from 1.0 per cent. Also, corporate tax rate for apparel exporters has been cut to 12 per cent.