Tax receipts rise as economy recovers

Revenue collection soared nearly 15 per cent to Tk 34,548 crore in the July-August period of the current fiscal year from Tk 30,160 crore, powered by a recovery in economic and business activities since lifting of the countrywide lockdown early August.

Surging imports extended support to revenue collection growth through overseas trade, according to provisional data from the National Board of Revenue (NBR).

Despite the strong gain, the revenue collector still lagged Tk 5,215 crore behind its target of Tk 39,759 crore for the first two months of the fiscal year.

The NBR has been tasked with collecting Tk 330,000 crore from the whole of the fiscal year ending in June.

Towfiqul Islam Khan, senior research fellow of the Centre for Policy Dialogue (CPD), said the annual collection target was unlikely to be achieved despite the growth.

He said the latest collection growth was in line with the recovery following the second wave of the coronavirus pandemic.

"Surely, increasing provisions for tax deducted at source in the last budget has also helped," he said.

Last year, because of a slump in economic activities caused by the Covid-19, overall tax receipts declined.

In July, the first month of the fiscal year, taxmen posted only a 4 per cent year-on-year growth in tax collection, since the economic activities suffered for countrywide restrictions for roughly three weeks to battle the second wave.

The lifting of the bar along with vaccinations unleashed business activities, enabling the VAT authority to log a 14 per cent increase in indirect tax to Tk 12,964 crore in the July-August period of the current fiscal year from Tk 11,350 crore a year ago.

Tariff collection from customs soared 16 per cent year-on-year to Tk 11,580 crore in the first two months of the current fiscal year from Tk 10,008 crore in the previous fiscal 2020-21 as an uptick in imports continued.

Buoyancy in income tax, also known as direct tax, continued. In the July-August period of the current fiscal year, taxmen collected 14 per cent higher tax year-on-year to Tk 10,002 crore from Tk 8,800 crore in the previous fiscal, according to the NBR data.

Khan said priority needs to be given in curbing tax evasion as much as possible without harassing the businesses.

"While businesses will thrive to recover as Covid cases are declining, the government will also need adequate resources to support the marginalised people and invest for sustainable recovery of the economy," he said.