The government has set the next fiscal’s revenue target at Tk 3.89 trillion, which is achievable considering the country’s economic volume and the number of people with taxable income, experts have said.
Experts have also stressed the need for modernization of Value Added Tax (VAT) payment to ensure that the VAT collected by traders is being deposited at revenue account, along with bringing transparency in the overall revenue collection process.Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), said Bangladesh remains behind even Nepal in the tax-GDP ratio.
“Though Bangladesh’s economy is stronger than Nepal and the growth rate is faster than other countries in Asia, it is not reflected in the revenue income,” he added.
“After the LDC graduation, Bangladesh has to face some challenges in revenue earning from import-export duty in line with the conditions for member countries of the world trade organization (WTO) and withdrawal of existing export quota system. So alternative revenue income scope has to be ensured,” said Professor Mustafizur, also an expert on international trade.
Muhammad Abdul Mazid, former chairman of NBR, said there are around 6 million active TIN holders in the country of whom only 2.4 million are submitting returns.
“There is a lack of proper monitoring and supervision in other sectors as well due to shortage of capable manpower in the tax offices,” he added.
The proposed budget for FY 22 has set the target for total revenue income at Tk 3.89 trillion, which is 11.3 per cent of GDP. Of this, Tk 3.30 trillion will be collected through the NBR sources. Tax revenue from Non-NBR sources has been estimated at Tk 160 billion, while the non-tax revenue is estimated to be Tk 430 billion.“We have been implementing the new VAT law since July 2019. To achieve success in this endeavour we will continue with the programs in the next FY2021-2022 to deploy necessary manpower, provide equipment and logistics and enhance skills. The largest portion of government revenue is collected through the National Board of Revenue (NBR),” said finance minister AHM Mustafa Kamal in his budget speech.
Of the target of Tk 3.30 trillion from NBR sources, Tk 1049 billion has been estimated from taxes on income, profits and capital gains, Tk 1277 billion from VAT, Tk 544 billion supplementary tax, Tk 379 billion import duty, Tk 0.56 billion export duty, Tk 38.25 billion excise duty and Tk 10.5 billion from other sources.
“While presenting the budget for the previous fiscal year, I highlighted a number of reform initiatives taken in tax revenue management. We have started implementing those reforms from the current fiscal year,” the finance minister said.
Kamal said, however, “We could not successfully complete those due to the COVID-19 pandemic throughout the fiscal year. I would like to continue all these reform programs in the coming fiscal year.”