Good revenue growth on rising prices of imported goods

The rise in commodity prices in the world market has led to an increase in duty on imported goods, which has kept the government's revenue collection in a more comfortable position than last year.

According to the latest figures released by the National Board of Revenue (NBR), the revenue collection in the first nine months through March of fiscal 2021-22 has increased by about 14.5% over the same period of the previous fiscal year.

This growth is more than the average growth of the last five years for the same period.

Despite this, the NBR is not in a comfortable position because if the revenue collection increases at this pace, the government's target for the current financial year will not be achieved, economists and even the officials of the revenue department think.

In the meantime, the NBR is going to set a relatively large revenue target for fiscal 2022-23.

Economists say the rise in commodity prices in the international market has played a bigger role than the NBR in achieving nearly 14.5% growth in revenue.

Towfiqul Islam Khan, senior research fellow of the Centre for Policy Dialogue (CPD), told The Business Standard, "The increase in commodity prices in the international market has played a bigger role in the growth of revenue."

The revenue statistics say the same thing. According to the NBR, the highest growth during the period under review was at the import duty level, at around 21%. At the same time, value-added tax (VAT) and income tax collection increased by 9.94% and 14.09% respectively.

Towfiqul Islam Khan thinks that at the rate at which import expenditure has increased, the collection of import duty should have been done at a higher rate.

According to the latest calculations of the Bangladesh Bank, imports have increased by 43% in the first nine months of the current financial year.

However, Benapole Customs House Commissioner Md Azizur Rahman said, "A large number of duty-free goods or goods with less duty have been imported in the current financial year. Of the imported items, products used in big government projects were big in number."

Despite the good pace of revenue collection, if the current pace is ensured, the revenue collection target will not be achieved in the next three months till June, in which case there may be a deficit of around Tk30,000 crore from the target.

However, the CPD's senior research fellow thinks that relieving the common people from the pressure of inflation in revenue collection will be a big challenge for the NBR in the future.

He said there would be challenges for the NBR in the future on three issues. In addition to relieving average consumers from inflationary pressures, the question is whether the NBR will be able to withdraw tax exemptions and prevent tax evasion.

However, the NBR has already withdrawn or reduced the VAT, to ease some of the pressure relating to the rise in edible oil and sugar prices in the world market.

Despite this, consumers have to buy edible oil at almost double the price of last year.

A senior NBR official told TBS that the government has made big concessions on corporate over the last two years. Apart from this, VAT has been exempted in some sectors. Sugar and edible oil have been exempted from VAT. Otherwise, the growth in revenue collection would have been more.

He said the collection is relatively high towards the end of the financial year. With that in mind, even if the current growth rate increases further, the target may not be achieved in the end.

Economists, however, boldly identify several challenges for failing to meet the revenue collection target.

These are the inability to implement the reform agenda of the NBR, the inability to bring a huge amount of money into the government exchequer due to the inability to prevent tax evasion and the huge amount of tax exemption in various sectors.