Bangladesh needs full digitalization of the revenue and VAT systems to boost the supply of internal resources for proper implementation of the budget, experts have said.
The country’s budget deficit is being widened every fiscal year over the last few years due to a shortfall in revenue collection. As a result, the government’s dependency on borrowing from saving tools, banks, and foreign grants, as well as donations has increased, they said.The estimated budget deficit in 2021-22 fiscal will stand at Tk 2.141 trillion, which is 12.77 per cent higher than that of FY 21, finance ministry sources said.
The revenue collection target was set at Tk 3.30 trillion in FY 21. The National Board of Revenue has so far collected Tk 1.782 trillion in nine months up to March of FY21, the NBR sources said.
It means the revenue shortfall is around Tk 1.517 trillion till March this fiscal and it is unlikely that there will be a significant surge in revenue income in the last three months of the fiscal year amid the corona pandemic, the experts said.
Dr. Zaid Bokht, Chairman of Agrani Bank, told the Daily Sun that the government has to expand the areas of revenue income instead of increasing tax and VAT rates.
He said a large portion of people are not paying tax across the country, though they have taxable income and even bank balance.
Prominent economist Zaid Bokht suggested collecting tax from mega cities to upazila level along with campaigns to encourage paying tax and VAT.Dr Ahsan H Mansur, executive director of PRI, a private research firm, said a major reform is needed including digitalization of the entire revenue system.
“Without reforms, increasing revenue collection would be a challenge even in the post-pandemic period,” he added. He feared that the government would be in big trouble if the revenue collection from internal resources does not see expected growth.
Mansur said after LDC graduation, Bangladesh’s major revenue income from import goods and machinery would be reduced, so revenue income should increase from other areas.
International trade experts and researcher Dr Mohammad Abdur Razzaque, chairman of research and policy integration for development (RAPID), said Bangladesh’s tax-GDP is lower compared to other south Asian countries, though the country’s economic volume holds potential for growth in revenue collection.
Abdur Razzaque, who also works as a trade consultant for the ministry of commerce, said time-befitting digitalization, automation and a positive attitude of revenue officials will help boost revenue collection.
The size of the FY 20 fiscal year budget was Tk 5.231 trilling with a deficit of Tk 1.412 trillion. In the 2018-19 financial year, the size of the budget was Tk 4.645 trillion with a deficit of Tk 1.252 trillion. In FY 18, the deficit was Tk 1.122 trillion against the budget outlay of Tk 4.266 trillion. The size of the budget for FY 17 was Tk 3.406 trillion while the deficit was Tk 682 billion. The size of the budget for FY16 was Tk 2.951 trillion with a deficit of Tk 654 billion.