It is concerning that the government has lowered its revenue collection target by a whopping Tk 290 billion in its revised target for the 2020-21 fiscal year. However, it was not unexpected that revenue collection will fall short of target because of the pandemic-hit economy. Due to stagnation in business, revenues could not be collected at desired level.
According to our report, at the beginning of the current fiscal year, the government had set a target of revenue collection for NBR at Tk 3.30 trillion. Of the total amount, Tk 1288.73 billion was targeted from VAT, Tk 1054.75 billion from travel and income tax and Tk 956.52 billion from import duty. But the NBR collected Tk 1321.66 billion in revenue during the July-January period of this fiscal year, which is only 40 per cent of the target.Against this backdrop, the government had in fact hardly any option but to downsize the target. No doubt it will put immense pressure on budget management. The government might end up borrowing more from banking channels and foreign sources.
Now, prudent steps must be made to boost revenue collection to minimize budget deficit. The government can raise revenue collection by widening tax net, formulating new tax policies for e-commerce, plugging loopholes in the existing law so that none can evade tax, and finally, by increasing economic activities.
According to media report, following the government’s decision to allow investment of untaxed money in the housing sector in the last budget, as many as 5,000 crore has been invested in this sector. This exposes the size of black money holders in our society and the enormity of the challenges of stopping tax evasion.
Besides, many foreign and local e-commerce sites have been doing brisk business in the country, but it seems most of them have not been brought under the government’s tax net. So, in this regard the policymakers must modify existing tax laws to cover internet based businesses, and simultaneously a skilled ICT-cell must be established to look into online taxation. Similarly, appropriate measures must be taken to bring foreign workers under tax net since that their number has been growing steadily.