The National Board of Revenue (NBR) expects the revenue collection shortfall to reach Tk 880 billion (88,000 crore) in the current fiscal year.
The agency estimates that total revenue collection could stand at Tk 4.15 trillion (415,000 crore) by the end of June. The revised revenue target for the current fiscal year is Tk 5.03 trillion (503,000 crore).
The latest revenue collection figures were disclosed in an NBR press release issued on Sunday night.
According to the NBR, customs duty and tax collections amounted to Tk 3.89 trillion (389,953 crore) as of 20 June, covering 11 months and 20 days of the fiscal year. A total of Tk 293.11 billon (29,311 crore) was collected during the first 20 days of June.
The NBR expects to collect another Tk 250 billion (25,000 crore) during the final 10 days of June. If that target is achieved, total revenue collection for the fiscal year will reach a record Tk 4.15 trillion (415,000 crore), the highest in the country's history.
However, there could still be a shortfall of Tk 880 billion (88,000 crore) against the target.
The NBR also said it has already formed three separate taskforces comprising field-level officials from the income tax, VAT and customs departments to accelerate revenue collection.
These taskforces have undertaken various initiatives to boost revenue, including expediting the disposal of cases pending before appellate authorities, tribunals, the High Court, the Supreme Court and alternative dispute resolution mechanisms.
What happens when there is a revenue shortfall?
A revenue shortfall first puts pressure on government spending. The NBR finances more than two-thirds of the national budget every year.
However, the budget includes mandatory expenditure such as salaries and allowances for government employees, as well as interest payments on domestic and foreign loans. These expenses must be met, leaving little room for cuts.
The government also implements development projects under the Annual Development Programme (ADP). In the current fiscal year, for example, it is implementing an ADP worth Tk 2 trillion (200,000 crore).
When funding comes under pressure, operational expenditure cannot easily be reduced. As a result, the government typically cuts spending on development projects.
Moreover, there are long-standing limitations in the government’s capacity to utilise development funds fully. Reducing ADP allocations often becomes the only available option.
Bangladesh has also had a persistently low tax-to-GDP ratio for many years, which has now fallen to between 6 and 7 per cent.