Revenue soars sharply in May

Revenue collection saw a major jump in May, following negative growth just the previous month, and NBR officials are attributing it to easing import restrictions and an increase in monitoring.

According to sources at the National Board of Revenue (NBR), revenue in May increased by around 29% year-on-year, which is the highest in the current fiscal year.

The revenue officials further said the collection of dues, judgements in pending cases in favour of the NBR, and the collection of revenue therefrom are among the reasons for increasing revenue collection.

Economists, however, believe that the jump in revenue may have been due to the NBR's "enhanced effort" in the last moment to meet the conditions of the International Monetary Fund (IMF).

They think that there will still be a massive revenue deficit in the current financial year.

"There is pressure on the NBR to increase revenue collection due to commitments with the IMF. For this reason, the revenue officials have made enhanced efforts to increase collection in the year's closing. Because of this, the collection may have increased," Debapriya Bhattacharya, distinguished fellow of the Centre for Policy Dialogue (CPD), told The Business Standard.

"The NBR may have collected part of the tax in advance from the companies that are supposed to pay tax in September," added the eminent economist.

While approving a $4.7 billion loan to Bangladesh in January, the multilateral lender set some conditions, which included increasing the tax-to-GDP ratio by 0.5% to 8.3% in fiscal 2023-24, from 7.8% in fiscal 2021-22.

Before disbursing the next tranche of the loan in October, the IMF will review how well its conditions for reforming Bangladesh's financial sector have been met.

As a result, there is pressure on NBR to increase revenue. As part of this, the tax rate has been increased in various sectors in the proposed budget.

The government restricted imports from the beginning of the current fiscal year in view of the dollar crisis, but the restrictions have been eased since last March, leading to an increase in revenue collection by the Chattogram customs, which accounts for 90% of the country's import duty collection.

An official at the Chattogram Customs House told The Business Standard that imports are increasing as the restrictions on imports have been eased.

"Growth in revenue collection has been 5% in the 11 months till May. We expect it to rise to 6% by June," he added.

Sources said in May, NBR exceeded its target by over Tk32,000 crore, which is 28-65% higher than the same period of the previous fiscal year.

There was also an extraordinary growth in the collection from income tax and travel tax, which was about 50%. At the import level, duty collection has increased by about 27% and value-added tax collection has increased by a little over 15%.

Tk2.82 lakh crore has been collected against the target of Tk3.15 lakh crore in the 11 months till May. Despite the 9% growth, the collection fell short of around Tk33,000 crore of the target.