Despite some volatility seen in different indicators of the economy, the government has had a comparatively smoother ride in collecting revenue.
This, however, may not mean the picture is as rosy as it appears.
According to estimates by the National Board of Revenue (NRB), collection in the 10 months from July to April of the current fiscal 2021-22 increased by about 15% compared to the same period last year. It is also higher than the average growth in the same period over the last five years.
The NBR has so far collected a little over Tk2.27 lakh crore. Last April, the collection was about Tk23,000 crore. The revenue target for this year has been set at Tk3.30 lakh crore, which is 24% higher than last year.
In order to meet the target, the NBR would have to collect Tk51,000 crore each month for the remaining two months, which economists think is virtually impossible.
Revenue officials termed the growth satisfactory, saying they expected it to grow even higher – up to 17% – in the remaining two months of the fiscal year.
But economists have poured cold water on such an optimistic outlook, chalking the growth down to an increase in the price of imported goods.
According to the latest data released by the Bangladesh Bank, imports increased by 43.5% in the first nine months till March of the current financial year.
A closer inspection of the NBR's figures shows that tariff collection rose due to rising import costs, which played a role in the revenue growth.
The highest growth in the first 10 months was also seen in the collection of duty, which is mainly levied on imported goods.
The lowest growth was registered in the collection of value-added tax (VAT) on sales at a local level.
Towfiqul Islam Khan, senior research fellow at the Center for Policy Dialogue (CPD), told The Business Standard that the growth in revenue could not be termed satisfactory as it was a result of increasing prices of imported goods.
The growth in income was basically price-driven and not down to the efficiency of the NBR.
He also pointed out that even with the growth, there could be a deficit of around Tk28,000-30,000 crore from the target at the end of the fiscal year.
Predicting harder times ahead, Towfiqul said the pressure on both subsidies and other government spending would increase. To deal with this, it was necessary to increase administrative efficiency of the NBR and increase collection by curbing tax evasion.
For the upcoming budget, he suggested lowering the commodity price tax, raising the tax-free income limit, reducing exemptions for large industries and avoiding corporate tax reduction.
Towidhul is not alone in reaching this conclusion.
Muhammad Abdul Majid, former NBR chairman, also said that the increase in the price of imported goods led to an increase in import duty, which subsequently increased the government's revenue collection.
He told TBS that this resulted in temporary relief in NBR's revenue collection, but the general people were feeling the pinch of rising prices.
He said given the current state of the economy, there was no prospect of making dramatic progress in revenue collection, especially VAT, in the remaining months.
In the 2020-21 financial year, the NBR collected Tk2.66 lakh crore.
Meanwhile, the NBR's revenue target for the 2022-23 financial year is going to be Tk3.70 lakh crore.
The NBR collected a little over Tk23,000 crore last April. Collections were around Tk23,000 crore and Tk27,000 crore in last year's February and March.