The government must find out some ways to collect revenues, otherwise the ongoing development work of the country will suffer. Also many other government funded programmes will shrink in volume due to financial constraints. Welfare programmes which are funded by the government, like the social safety net programmes, will face both qualitative and quantitative change due to fund shortage. Therefore, NBR must be more active, more pragmatic and more calculative.
Data shows that in FY 20, the NBR collected the highest Tk 816 billion from VAT, followed by Tk 732 billion from tax and Tk 606 billion from customs duty. From the figures it is visible that VAT is the highest source of internal revenue in the country. VAT is paid by the various small, medium and large enterprises in the country. All enterprises in the country are facing loss of earnings due to the economic slump as a result of Covid-19, and this has directly affected VAT collection of the revenue department.According to the NBR, the only time Bangladesh witnessed such a fragile state in revenue collection was in the FY 1975-76. Revenue growth has moved upwards since then until FY 2019-20, when revenue growth ended up in the negative. The coronavirus outbreak has led to weakening of the economy and a sharp fall in revenue collection. This is a worldwide phenomenon not just unique to Bangladesh. We are facing the onslaught of a deadly pandemic along with the rest of the world.
Usually revenue collection increases at the end of the financial year but as Coronavirus hit us just before the end of the year there was no hope of any recovery of loss of revenue; rather the government faced unexpected expenses of giving financial support to jobless workers and the floating population. The government had to borrow a record amount from the banking system in order to meet regular expenses due to decline in the revenue collection.
According to experts, major reforms are needed to improve the revenue system to enable the desirable revenue collection in the present day novel situation. We must meet the evolving challenges successfully; else the government will have difficulty in meeting expenses if the revenue collection from internal resources doesn’t grow at an expected rate.