Tax collection rebounds in August

Revenue collection rebounded in August after remaining downbeat for four months since April, thanks to recovery in business and economic activities that buoyed overall receipts.

Provisional data from the National Board of Revenue (NBR) showed that collection grew in all areas, with imports driving the rebound followed by value added tax (VAT) and income tax.

In August, taxmen collected Tk 15,406 crore, a rise by 7.85 per cent from the same month a year ago. 

Despite August's recovery, overall collection was nearly the same when comparing the July-August period year-on-year.

It has edged up marginally to Tk 30,163 crore from Tk 30,113 crore, data from the NBR showed.

"It is good to see that revenue collection is regaining pace owing to revival of economic activities. Collection will be on the upward if there is no crisis in the coming days," said Md Anwar Hossain, director general (research and statistics) of the NBR.

Revenue collection slumped in April as business and economic activities collapsed after the government declared a general holiday and shutdown to slow the spread of the Covid-19 pandemic in the country.

Collection improved in the later months as businesses gradually reopened.

However, overall tax receipts continued to remain in the negative and the NBR posted negative growth last fiscal year which ended in June, for the first time since the nation gained independence.

In July, tax collection declined 6.7 per cent from that in the same period a year ago.

The NBR data showed that collection of taxes from import and export activities soared 16.87 per cent year-on-year to Tk 4,992 crore in August from the same period a year ago.

The VAT collection from domestic economic activities grew 5 per cent year-on-year to Tk 5,731 crore in August from that in the same month the previous year.

Income and travel tax also increased in August.

However, income tax and VAT receipts remained below last year's collections of the July-August period.

Collection of customs duty had been in the upward in the July-August period compared to the same period a year ago, showed the NBR data.

For the current fiscal year, the government assigned the NBR to collect Tk 330,000 crore to finance the budget.

And the latest collection fell short of the target for the first two months of the fiscal year 2020-21.

Towfiqul Islam Khan, senior research fellow of the Centre for Policy Dialogue, said the shortfall of revenue collection would be a major constraint for the government.

"The early trends of revenue collection show that the economic recovery has remained fragmented. It is also clear that the fiscal framework, be it revenue collection, be it public expenditure, will need a major overhaul," he said.

Khan said if there was no overnight revitalisation of administrative capacity, the pace of economic recovery would determine the revenue outcome.

"The other critical component may be addressing tax avoidance. Nevertheless, the government should be ready to adjust its public expenditure by prioritising and avoiding wastages in view of scarcity in government revenue," he said. 



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