Revenue target hard to achieve: Muhith
Achieving the revenue collection target of Tk 248,190 crore for this fiscal year will be “very difficult” after the last-minute obstruction to the implementation of the new VAT law, Finance Minister AMA Muhith said yesterday.
An additional Tk 20,000 crore has been added to the collection target banking on the implementation of the VAT and Supplementary Duty Act 2012 that prescribes a 15 percent VAT for most of the goods and services available in the country from fiscal 2017-18.
Following opposition from the business community and the general public, the implementation of the new law was shelved at the eleventh hour by lawmakers in parliament.
However, the VAT collection target was not changed in light of the development. The last-minute change meant that the National Board of Revenue did not get the time to make the requisite adjustments to its collection arrangements.
“How do you meet the target now? It is a critical problem,” Muhith said while talking to reporters after a purchase committee meeting at the secretariat.
He will be able to give further details at the end of the month, after he has held meetings with the concerned authorities to discuss how the target can be achieved.
On the VAT online project, the finance minister said the process is ongoing. Meanwhile, the revenue authority is relying on cigarettes and tobacco products and steady growth of economic activities to soften the blow of the postponement of the new VAT law by another two years.
Some new measures could be taken under the existing VAT law, which is forecasted to generate about Tk 17,000 crore of additional revenue this fiscal year, according to taxmen. But, it would be tough to meet the VAT collection target of Tk 91,254 crore for the fiscal year, which is 33 percent higher than the outgoing year's receipts, they said.
The revenue authority registered 20 percent growth in collections last fiscal year -- the highest since fiscal 2013-14, according to NBR data.
“We are preparing a work plan to achieve the target through administrative measures, including curbing evasion and realising arrears,” said a senior VAT official.
About Tk 11,000 crore of extra revenue would come for the steady economic growth, domestic demand and the price spiral of goods and services, he said.
More revenue will come as the price slabs for cigarettes and tobacco products were re-worked. “We expect to get Tk 5,000 crore more revenue from cigarettes, bidi and other tobacco products.”
The NBR collected Tk 20,000 crore as VAT and supplementary duty from this category last fiscal year.
The small and medium traders will continue to pay package VAT this fiscal year, but the NBR doubled the amounts. For instance, the package VAT for traders in Dhaka and Chittagong city corporation areas was raised to Tk 28,000 a year from Tk 14,000.
The package VAT system brings the revenue authority less than Tk 20 crore a year. “The collection efforts will be intensified this time.” Besides, they would look to tap into new areas to achieve the annual collection target. However, even if the new VAT law came in to effect from this year it would have taken two-three years to reap its full benefits, he added.