Tax receipts rebound

Tax collection bounced back in Bangladesh in the last fiscal year to grow at the sharpest pace in 10 years, riding on increased imports and an uptick in receipts of value-added tax.

The National Board of Revenue (NBR) collected around Tk 260,000 crore in 2020-21, up more than 20 per cent from Tk 216,540 crore year-on-year, provisional data showed.

This is the highest growth rate since fiscal 2011-12.

The recovery came a year after the NBR posted its first-ever decline since independence in the face of the onslaught of the coronavirus pandemic, which forced the government to impose a two-month-long countrywide shutdown from the end of March to May, crippling the economy.

The curb was lifted in June last year, enabling businesses to run in a new normal until the beginning of the second wave in April this year. This enabled the NBR to raise more taxes.

Receipts from customs tariff shot 27 per cent year-on-year to Tk 77,150 crore in FY21 against Tk 60,550 crore.

Soaring imports and record remittance flows buoyed domestic demand, helping VAT collectors log increased receipts of the indirect tax paid by consumers.

The collection of VAT, the biggest source of revenue for the government, was up 15 per cent to Tk 97,490 crore in FY21.

"Compliance has increased due to monitoring and supervision. There had been efforts from the field level officials too," said Md Anwar Hossain, director-general for research and statistics of the NBR.

He said there had been a good realisation of arrears, while an acceleration of automation of customs and VAT systems also paid off.

"We would have been able to collect a higher amount of revenue if the Covid-19 pandemic was over."

In FY21, income tax collection grew 19 per cent to Tk 85,224 crore, up from Tk 71,432 crore in FY20, according to NBR's provisional data.

Despite the growth in collection, overall receipts stood Tk 41,000 crore below the NBR's revised goal of Tk 301,000 crore for the last fiscal year.

Towfiqul Islam Khan, senior research fellow of the Centre for Policy Dialogue, said the overall revenue collection could not be termed unsatisfactory in view of past years' trends and the ongoing pandemic.

"The shortfall was largely attributed to traditional structural weaknesses and bad programming," he said.

The deficit implies that a higher than planned growth will be required in FY22.  Revenue mobilisation is important as the government may need to provide more support to the vulnerable population given the pandemic.

"Better revenue mobilisation may give the government much-needed confidence to allocate more resources to the distressed population," said Khan.

The NBR has been given a task to raise Tk 330,000 crore in the current fiscal year.