NBR chairman Abu Hena Md Rahmatul Munim
NBR chairman Abu Hena Md Rahmatul MunimCollected

Chairman of the National Board of Revenue (NBR), Abu Hena Md Rahmatul Munim, in a letter to finance secretary Abdur Rauf Talukdar, said that even the revised revenue target will not be met in the current 2019-20 fiscal. He said it will not even be possible to achieve the revenue target being set for the 2020-21 financial year.

The revenue target for the current financial year had been set at Tk 3,256 billion (Tk 3,25,600 crore). This target was recently cut down to Tk 3,005 billion (Tk 3,00,500 crore). However, with the COVID-19 crisis being drawn out for so long, it will be impossible to achieve this revised target.

Targeted revenue collection had been on a steady rise ever since the country’s independence, but this time it will be less than the preceding year. It will be less by Tk 150 billion (Tk 15,000 crore). The NBR chairman apprised the finance secretary of the matter in a letter on 14 May.

Stating that Tk 2,346.84 billion (Tk 2,34,684 crore) had been collected in revenue in the 2018-19 financial year, the NBR chairman in his letter said that the collection at the end of the 2019-20 fiscal may be Tk 2,200 billion (Tk 2,20,000 crore) at the most. That will be Tk 156 billion (Tk 1,5,600 crore) less than the target and Tk 805 billion (Tk 80,500 crore) less than the revised target.

The 2020-21 financial year budget is scheduled to be presented in parliament on 11 June. NBR has been informed that the revenue target for the coming fiscal is Tk 3,300 billion (Tk 3,30,000 crore) because even of the situation normalises from 1 July, a negative impact will remain on the local and global economy.

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When contacted, NBR chairman Abu Hena Md Rahmatul Munim said he would not comment on the letter.

Unrealistic target

Former advisor to the caretaker government AB Mirza Md Azizul Islam, speaking to Prothom Alo about the matter, said that from the outset, revenue collection hadn’t been looking good this time. And with the onset of COVID-19, it simply worsened. A big target has been set for NBR. It is not realistic to expect a 30 to 35 per cent higher target to be achieved. The problem is that the basic requirement is not being addressed.

In the near future, a large part of the economic programmes will focus on people’s basic demands. This will include radical changes in the health system, food, education, housing and people’s security. Most of this basic production, marketing, supply and service is completely tax-free or has minimum taxation.

The basic requirement, Mirza Aziz said, is expanding the tax umbrella. He said instead of widening this, every year pressure was being increased on those who pay tax.

Revenue officials under mental pressure

The NBR chairman in the letter further said that if a high target is fixed, the tax collectors in the field are placed under mental pressure. At one point if they feel it is impossible, they just give up. In many instances they are accused of harassment. If the target is realistic, it is an incentive for these officials to be successful in achieving this target. The chairman requested the finance secretary to come up with a reasonable target.

Finance secretary Abdur Rauf Talukdar refused to comment in the issue. However, officials of the finance ministry involved in drawing up the budget, said that as the budget is expanded every year, the NBR target is also expanded. At this stage there is no scope to lessen the target.

Chairman’s reasoning

Abu Hena Md Rahmatul Munim, in his letter, said that because of the new VAT law and the economic vibrancy at the beginning of this fiscal, there had been hope of a growth in revenue income. But the coronavirus pandemic has had an extreme detrimental social, political, psychological and economic impact. It is uncertain when things will be back to normal. Yet the tax collection system directly and indirectly depends on the consumer demand of people all over the world. If local consumer demand drops, imports will fall. If industrial production falls, the demand for raw materials and machinery will decrease. This will have extensive negative impact on indirect taxes.

And direct taxes will also decrease, if income generating activities decrease and economic recession sets in.

In the near future, a large part of the economic programmes will focus on people’s basic demands. This will include radical changes in the health system, food, education, housing and people’s security. Most of this basic production, marketing, supply and service is completely tax-free or has minimum taxation.

Former chairman of NBR, Mosharraf Hossain Bhuiyan, told Prothom Alo that NBR is kept under huge pressure. He said NBR must make an effort to achieve its target. However, as the budget is very ambitious, it would not be fair to blame the NBR officials if the target is not achieved.

*This report has been rewritten in English by Ayesha Kabir

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