'It had a negative impact on the entire economy'
The National Board of Revenue (NBR) faced huge shortfall in revenue collection throughout 2019 against its targets amid declining trend of imports and huge reshuffle in value added tax (VAT) management.
By the latest data, the board collected only Tk65,096 crore revenue, leaving Tk20,220 crore short against the target of Tk85,317 corer in July-October, the first four months of FY2019-20.
The shortfall was Tk2,414 corer in July against the single month target, Tk6,903 crore in August, Tk5,590 crore in September and Tk5,313 crore in October.
Of the four months' shortfall, customs had Tk7,799 crore deficiency against its target, while VAT had Tk8,258 corer, and income tax Tk4,162 crore.
However, the NBR attained 4.33% growth in July-October compared to the same period of the previous year, thanks to 12.90% growth in income tax. The year-on-year growth was poor 0.09% in customs, 1.79% in VAT in the first four month of the current fiscal.
The revenue target for the FY2019-20 has been fixed at Tk325,600 corer, up by 16.28% from the revised target of last fiscal year.
In the last fiscal year (FY2018-19) concluded in June, the NBR set a record leaving Tk56,171 crore or 20.06% shortfall in revenue collection against its fiscal target.
As per former NBR chairman Muhammad Abudul Mazid, the year 2019 was the worst year for the revenue collection.
“The NBR performance was very poor in both achieving target and attaining year-on-year growth in the year,” he observed.
The shortfall in revenue collection, Mazid said, hampered the budget implementation significantly, especially the ongoing mega projects which suffered for shortage of funding.
“As a result, the government had to increase borrowing from both internal and foreign sources. Large internal borrowing, especially from banks, hit the country’s economy hard, creating liquidity crisis in financial sector," he said, adding that the crisis in its turn dampened the private sectors as they did not get sufficient bank loans.
Every year, the government’s borrowing increased and it had to spend about 22-23% of the total budget for repayment, he mentioned.
Agreeing with Mazid, Senior Research Fellow at Centre for Policy Dialogue (CPD) Towfiqul Islam Khan said that the shortfall in revenue collection was a big challenge for the government in the year.
“It had a negative impact on the entire economy,” the researcher added.
Apart from the shortfall against target, Towfiqul said the year-on-year growth was not satisfactory at all.
He cited lack of NBR's capability, lack of implementation of the new VAT law, crisis in economy and poor governance as reasons behind the grim situation of revenue collection.
VAT and Supplementary Duty Act 2012 was not properly implemented, which slowed down VAT collection, he said. “Businesspeople are confused as to if the new system is being followed,” he added.
The VAT collection was being interrupted immediately after the new act came into effect on July 1 due to adapting the changes brought in the law by businesses, said a recent NBR evaluation.
It also mentioned cigarette pricing policy and 15% VAT waiver on liquefied natural gas (LPG) as major reasons for the fall in VAT collection.
On customs, the former NBR chairman Mazid said revenue from the customs duty fell as imports of different products decreased this year compared to the other years.
On income tax, he said that major sources, especially banks and capital markets, were in crisis, which was why the income tax sector failed to achieve satisfactory growth.
Revenue collections in details
If the calendar year is considered, the NBR collection stood Tk190,960 crore between January to October in 2019, where shortfall was Tk48,393 crore against its target of Tk239,353 corer. Last year, the shortfall was only Tk22,348 crore in the same period.
The NBR finally could put the much-talked VAT and Supplementary Duty Act 2012 into force since July 1, seven years after the law was enacted. However, the authorities concerned could not properly implement all the sections of the new law yet.
Online VAT return filing system launched this year and other automation processes in VAT sector witnessed progress.
In income tax, e-payment system was launched to ease tax payments, especially for individual taxpayers. The NBR started a drive across the country for bringing the capable people in tax net from the mid of the year, and could add some 6 lakh new taxpayer till the last month.
The revenue board took massive initiatives this year for making the customs processes automated aimed at fast release of products at the ports.