NBR revenue soars despite import decline. Is the target feasible yet?
The National Board of Revenue (NBR) demonstrated a significant achievement in the first seven months of the current fiscal year, with tax collections surging by nearly 15% year-on-year.
The feat comes despite a considerable decline in imports, plummeting from an average of $8 billion per month in 2022 to $5 billion.
Despite this achievement, analysts warn that the NBR still faces a daunting challenge in meeting its ambitious targets, with the task ahead appearing formidable and possibly unattainable.
The latest data reveal that the NBR has been able to collect an average of Tk24,615 crore per month during the July-January period of FY24, which falls far short of the target. To meet the annual target, average monthly collection must exceed Tk42,432 crore for the remaining period of the fiscal year.
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Zahid Hussain, former lead economist of the World Bank's Dhaka office, told The Business Standard, "The target given to the NBR is very high, and the chances of achieving it are slim."
He, however, added, "Considering the current economic situation, the growth in revenue collection over the last seven months is not bad at all. It is a significant achievement compared to previous years."
The NBR's FY24 revenue collection target has been set at Tk4.30 lakh crore, which is about Tk1 lakh crore more than in the previous financial year. To reach this target, the NBR will have to escalate revenue collection by around 30%. A review of NBR data shows that there has been no growth in revenue collection at such a high rate since the country's emergence in 1971.
According to NBR data, revenue collection in FY23 increased by 11% year-on-year. Moreover, average growth has been below 11% over the last five years.
Economist Zahid Hussain believes that the ambitious target was set to meet an IMF loan condition, which required an increase in the tax-to-GDP ratio by 0.5% per year.
Meanwhile, the NBR has revised down the annual target by Tk20,000 crore as the collection shortfall continues to widen.
According to NBR data, the last seven months saw the lowest growth in import tax collection – less than 10% - while value-added tax (VAT) collection stood at 16% and income tax collection was over 18%.
Sources indicate that the NBR fell short of the target by Tk17,751 crore in the seven months up to January.
Meanwhile, NBR Chairman Abu Hena Md Rahmatul Muneem held a meeting with field-level officers of the Income Tax Department at NBR headquarters in the capital on Tuesday to review the progress of revenue collection.
