The International Monetary Fund (IMF) is concerned over extra revenue collection of the National Board of Revenue (NBR). The visiting delegation of IMF in several meetings with NBR asked for their plan to generate additional revenue as per IMF condition.
The IMF has mandated an increase of tax by 0.5 per cent in GDP in the current fiscal. Various sources within the NBR have indicated that the customs, tax, and VAT wings have each presented separate plans to achieve the targeted additional revenue.
IMF’s Asia and Pacific region’s chief Rahul Anand accompanied by other members met NBR chairman Abu Hena Md Rahmatul Munin at his office on Monday. The topics of discussion included additional revenue collection as per IMF condition, tax exemption and reform plans.
The NBR chairman refrained from making any comment to the media after the meeting. NBR said it will send the meeting minutes to the finance ministry. The ministry would later brief the media on the issue. Rahul Anand also declined to comment to the media following the meeting.
Meanwhile, the NBR chairman held a meeting with three members of the customs wing, VAT wing and income tax wing yesterday before the meeting with the IMF delegation. The NBR chairman was informed about how the additional revenue will be collected. The three wings prepared three separate position papers with a view to informing the IMF of the plans about revenue collection and reform.
What is in the plan
The position plan of the income tax wing detailed the strategy of realising the additional tax. The income tax will have to collect Tk 1.36 trillion this fiscal which is Tk 240 billion more than the previous year. The authorities are hopeful to draw 13.58 per cent growth in income tax this fiscal fetching additional Tk 154 billion.
Besides, additional Tk 91 billion will come from several sectors because of various reasons including the raise in tax rate in budget. Tk 30 billion will come from land registration, Tk 5 billion from travel tax, Tk 3 billion from tobacco tax, Tk 15 from surcharge and minimum taxes on environment, Tk 25 billion from tax net expansion, and Tk 10 billion will come from the rise in tax on carbonated beverage. The NBR also wants to collect additional Tk 35.50 billion due in various sectors.
On the other hand, there is a plan to set up four special units for the structural reform of the income tax department. These units are tax intelligence unit, tax at source management unit, e-tax management unit and international tax unit.
The VAT department's position paper recommends the withdrawal of VAT exemption or an increase in VAT for nine sectors to meet the IMF's condition of collecting additional VAT. Sectors where VAT exemptions were lifted and VAT was imposed include mobile phones, polypropylene, staple fiber, ballpoint pens, software, and LPG cylinders. Additionally, VAT has been increased on cigarettes, jorda, gool, plastic products, aluminum products, and sunglasses. The NBR anticipates that the additional VAT will primarily come from these sectors.
On the other hand, additional Tk 12 billion may come from customs. Additional Tk 2.36 billion, according to customs officials, was collected from import of fruits in the first three months of this fiscal. Likewise, additional duty will come from several sectors. Besides, initiative will be taken to collect unpaid taxes of Petrobangla.
The NRB fixed a target of collecting Tk 3.7 trillion in duty and taxes in the 2022-23 fiscal. Later, the target was revised to Tk 3.48 trillion at the advices of IMF, but the NRB collected about Tk 3.32 trillion at the end of the fiscal. The IMF mission expressed their dissatisfaction over the matter during their meeting with the NBR officials on 5 September.
IMF on energy and fertiliser subsidy
An IMF delegation discussed the issue of subsidy at a meeting with the officials of the finance ministry. At the meeting, IMF officials inquired about the plan to reduce subsidy on fuel and fertilisers. In reply, the finance ministry officials told the IMF officials that there is no plan to reduce subsidy on fertiliser for now, but subsidy on fuel will be reduced gradually.