International Monetary Fund has projected the tax-to-GDP ratio of Bangladesh would remain flat at about 10.50% in the current fiscal year due to slowing economy amidst hartal and ongoing back to back blockades for last couple of months.
“A slowing economy in hartal-related disruptions and political uncertainly contributed to lower than programmed tax revenue outturns for fiscal year 2012-2013. The tax revenues will be downward in relation to GDP despite these influences expected to unwind gradually,” according to a latest IMF review.
IMF released the report on safeguarding fiscal sustainability, marking the approval of the fourth instalment of Extended Credit Facility loans recently.
The government set a target to achieve a tax-GDP ratio of 14.2 % of GDP in the current fiscal year despite having the challenges of the political unrest and apparel factory collapse at Savar.
The IMF report says the ratio is projected to remain flat at about 10.5% between fiscal year 2011-12 and 2013-14, with a decline of revenue from import taxes of 0.4% of GDP offset by gains in income taxes, boosted by automation.
The revenue ratio is projected to increase slightly in 2014-15 fiscal and then more decisively beyond the program period with the launch of VAT, it said.
National Board of Revenue (NBR) officials said the revenue board risks falling short of Tk10,000 crore to Tk13,000 crore from its revenue collection target set for the current fiscal year if the prevailing business situation does not improve due to back to back blockade and normalcy returns to power the economy.
The gloomy outlook on revenue earnings for whole of 2013-14 fiscal has recently been apprised of the finance ministry by the NBR after the main revenue generator falling short of target by about Tk3,120 crore during July-October period, they said .
NBR Chairman Md Ghulam Hussain told Dhaka Tribune they would not be able to maintain the revenue growth at 16% from the last fiscal year due to political unrest and uncertainty.
“We will estimate the actual revenue earnings situation after December to see the magnitude of shortfall in the slow down economic activities during hartals and blockades,” he said.
The government set a revenue collection target of Tk136,090 crore for the current fiscal year from the NBR portion with highest Tk51,000 crore envisaged to be collected from VAT, Tk48,300 crore in income tax, Tk35,790 crore in customs duties and Tk1,000 crore in other taxes.
