Export tax cuts concern IMF

The International Monetary Fund has sought a concrete action plan from the government to counter the impact of export tax cuts, expected to bring in revenue losses of around Tk 2,000 crore over the next 15 months.
Last month, the National Board of Revenue (NBR) slashed the export tax on readymade garments to 0.3 percent from 0.8 percent and on all other products to 0.6 percent from 0.8 percent, in a bid to make up for the losses incurred last year due to political turmoil.
The IMF said the political crisis has already hit revenue collections this fiscal year, and the export tax cuts, which will run from April 1 this year to June 30, 2015, will only deepen the shortfall.   
Using data from the NBR, the multilateral lender has estimated that the tax cuts will yield forgone revenues of around Tk 2,000 crore.
Subsequently, it has asked the government to forward a list of administrative measures that woudl be taken to make up for the revenue loss, along with a deadline for adoption and estimated yield in fiscal 2014-15.
The finance ministry has preliminarily set the NBR's revenue collection target for next fiscal year at Tk 150,000 crore, which is 20 percent more than the current year's revised target.
NBR, however, is yet to finalise on the measures to be taken, according to a high official of the tax collector.
“The export tax was deducted at source, so there was little scope for evasion. It was a sure shot source of revenue for us, so we are doubtful that the full amount can be recovered from other sectors. It is too big an amount.”
Meanwhile, the government has informed the IMF about the host of tax reform plans that it would propose in the upcoming budget.
The most noteworthy among the reform plans is the intent to overhaul the corporate income tax by gradually reducing the rate and broadening the base, such that overall corporate income tax collections are raised.
At present, the corporate tax ranges from 37.5 percent to 45 percent, which economists and businessmen said was excessive.
The NBR official said they would decide on the exact rate cut after discussing with Prime Minister Sheikh Hasina next month.