The Ministry of Finance sets a highly ambitious revenue collection target aimed at driving growth, funding infrastructure, and ensuring economic stability.
What follows is a year-long struggle to meet those expectations, only for the fiscal year to end with a massive chasm between target and actual collection.
For the National Board of Revenue (NBR), this chronic shortfall has become a permanent operational reality.
The current FY26 is proving to be no exception. Desired headway in revenue mobilization has been derailed by cooling economic activities, persistent high consumer inflation, stagnant private sector investment, slow manufacturing growth, and widespread business uncertainty.
These macro hurdles are further compounded by the NBR's internal administrative weaknesses, inefficiencies in tax management, and a slow-moving modernization process.
Consequently, official dockets indicate that the revenue shortfall has breached the Tk100,000 crore mark within the first nine months of the current fiscal year alone.
Despite this fiscal strain, financial planners are structuring a massive revenue target of over Tk600,000 crore for the upcoming FY27 budget—representing an aggressive 20% expansion over the current year’s revised mobilization target.
To back this historic layout, the government has fixed its total revenue collection target at an unprecedented Tk695,000 crore.
The mobilization strategy splits this target across three core collection areas:
- NBR Direct & Indirect Taxes: Budgeted to generate Tk604,000 crore.
- Non-NBR Tax Sources: Slated to bring in Tk25,000 crore.
- Non-Tax Revenue (NTR) Streams: Projected to contribute Tk66,000 crore.
While this represents the highest revenue target in the history of the country, actual collections tell a more complicated story.
The NBR has consistently missed its statutory collection targets over recent cycles.
Slowing commercial activity, compressed import lines, cooling industrial output, and limited progress in expanding the active taxpayer base have collectively kept revenues below target.
Analysts warn that if the NBR fails to meet these new revenue targets, the government will be forced to rely even more heavily on deficit financing.
One of the most persistent challenges facing the macroeconomy is that while public expenditures are scaling up rapidly, revenue generation is failing to keep pace.
The administration has pledged to expand social safety nets, increase allocations for health and education, roll out targeted welfare programs for low-income communities, and fund major infrastructural developments. Implementing these public initiatives requires vast liquid reserves.
However, the state's primary funding channel—tax revenue—remains in deep structural distress.
Data from the World Bank, the IMF, and independent think-tanks show that Bangladesh’s tax-to-GDP ratio is among the lowest in South Asia.
In FY25, this vital indicator dropped to a mere 6.8%, an underwhelming figure given the sheer size and development goals of the economy.
Macroeconomists maintain that unless the tax-to-GDP ratio is raised to at least 12% to 15%, funding development outlays and social safety programs sustainably will remain impossible.
A review of the past decade's financial data confirms that the NBR has failed to hit its statutory revenue goals nearly every single year.
In FY25, the NBR managed to collect Tk370,874 crore against a revised target of over Tk463,500 crore—leaving a net deficit of roughly Tk92,626 crore.
The government's initial baseline target for that cycle was an even higher Tk480,000 crore, which was downscaled mid-year due to ground realities. Yet, even the downscaled revised target proved out of reach.
Financial analysts point out that the root problem is not just weak collection machinery, but a flawed targeting methodology.
Revenue baselines are frequently drawn up based on political aspirations and administrative wishful thinking rather than empirical data on business performance, the investment climate, or the actual capacity of taxpayers. Consequently, the targets are structurally unrealistic from day one.
Squeezing existing taxpayers and businesses
When the threat of a massive fiscal deficit becomes clear mid-year, intense pressure is applied down the line to the tax administration.
This pressure frequently falls squarely on compliant businesses and existing, registered taxpayers.
Corporate leaders frequently complain that the tax authority attempts to bridge collection gaps by introducing ad-hoc tax lines, increasing VAT burdens, expanding source tax mandates, and deploying aggressive administrative audits.
These short-sighted tactics harm the business climate and drive production overheads.
Economists argue that instead of squeezing existing filers, the revenue strategy should focus on widening the tax net, curbing tax evasion, and implementing end-to-end digital tax management.
In reality, a vast portion of the country's economic activity remains entirely outside the formal tax net.
For years, public finance specialists have advocated for a structural separation between tax policy-making and tax administration.
Housing both policy formulation and field execution within the same agency compromises both institutional accountability and operational efficiency.
To address this, an ordinance titled the "Revenue Policy and Revenue Management Ordinance" was drafted during the tenure of the interim administration. The objective was to legally decouple the revenue policy division from day-to-day tax collection operations.
However, this critical structural overhaul hit a wall due to intense administrative pushback and bureaucratic friction.
The current government has since formed a high-level review committee to re-examine the issue.
Experts emphasize that without deep structural reforms within the NBR, the tax ecosystem cannot be transformed to meet the demands of a modern economy.
Recently, Finance Minister Amir Khosru Mahmud Chowdhury offered a candid critique of the prevailing tax architecture.
He emphasized that when setting fiscal policies, it is essential to understand the real-world operational challenges faced by merchants, industrial entrepreneurs, and ordinary citizens.
The minister noted that a deeply ingrained mentality has persisted within the tax administration where any impending revenue shortfall is met with reflexive moves to raise tax rates or impose additional compliance burdens.
He clarified that simply raising tax rates or creating new tax lines cannot foster a healthy economy; instead, a qualitative transformation of the tax infrastructure is required.
Many observers view this frank admission as an official recognition of the limitations of the current tax system.
