The revenue collection in Bangladesh will face a severe blow due to slowdown in economic activities in the country and elsewhere in the world following the coronavirus outbreak.
"Yes, there’ll be a shock, no doubt about it," a senior official at the National Board of Revenue (NBR) told UNB over telephone.He mentioned that there has been a discussion at the policymaking level already.
Finance Minister AHM Mustafa Kamal held a meeting on March 31with the NBR Chairman, Financial Institutions Division Secretary, Finance Secretary and Economic Relation Division Secretary.
At that meeting, the Finance Minister expressed concern over the revenue collection in the running fiscal activities due to the COVID-19.
He also told the meeting that the government might seek budgetary assistance from development partners to resolve the financial crisis in the coming budget for 2020-21 fiscal and the government is communicating with them in this regard.
According to well-placed sources, an assessment paper was sent to the Prime Minister through the Finance Minister regarding the shortfall of revenue collection by the NBR.
The NBR official involved in the income tax wing said the NBR high-ups, after the opening of offices following the general holidays would sit to find out the ways to overcome the possible revenue shortfall."So far, there’s no plan and no execution. It’ll be a tough a job, very tough job…we’ve to formulate our plan very carefully," he said adding that the taxpayers have to bear the burden, no matter what plan comes out from the NBR.
"So, we’ve to be very careful…there’s no pocket left for revenue collection which is intact till now. We’ve to think which area we’ll focus on as a new one and where we’ll put our pressure," he said.
Responding to a question, he said the main pressure will be on the income tax and VAT wing.
He said there should be some additional efforts to collect undisputed revenue from taxpayers. "But that amount won’t be a very significant," he said.
He also talked about a plan worked out to collect advance tax from big taxpayers which is scheduled for the next fiscal year. "We can collect a major part of the big taxpayers' advance tax that they were supposed to submit in the coming fiscal," the NBR official said.
Regarding putting extra pressure on the taxpayers, he said it would not be a wise decision.
Another senior official at the VAT wing said everything depends on the duration of this uncertain situation.
He said if everything goes well in Bangladesh and the situation in other countries does not improve then it will also affect Bangladesh. "The revenue collection till the mid-March was more or less normal… the stalemate emerged after that."
The NBR official said they have identified some sectors like tobacco, mobile phone, natural gas in industrial arena and construction where the consumption drastically has fallen.
Replying to a query, he also said they did not plan anything till date to overcome the revenue shortfall. "After the holidays, we’ll sit for that."
Deficit in revenue collection was Tk 37,498 crore in July-January of the running fiscal which was Tk 31,508 crore in July-December of the year, according to the NBR data.
According to the Export Promotion Bureau, the country’s export earnings during the July-February period fell by 4.79 percent.
The export earnings in February fell by 1.80 percent to US dollar 3.32 billion from US dollar 3.72 billion during the same month of the last fiscal year.
According to Bangladesh Bank data, the country’s import also dropped by 4.43 percent to US dollar 32 billion during the July-January period.
Only in January, import dropped by 12.87 percent, or US dollar 0.73 billion, to US dollar 4.94 billion from US dollar 5.67 billion in January last year.
The World Bank has estimate that the coronavirus outbreak will cause economic growth to slow significantly this year in China and other East Asian-Pacific countries, throwing millions of people into poverty.
In a worse-case scenario, the region could suffer its sharpest downturn since a devastating currency crisis more than two decades ago, the bank said in an updated forecast released on Monday.
The bank’s report projects that growth in the region would slow to 2.1 per cent this year from 5.8 per cent in 2019 under a “baseline” forecast in which economic recovery takes hold this summer.