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Bangladesh: Tax collection growth on the decline

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Tax collection growth on the decline

Tax collection growth slowed drastically in the first half of the current fiscal year due to falling customs tariff and direct taxes amid declining imports and reduced profits of firms, limiting the government’s scope to spend on development activities.

Sohel Parvez
Wed Feb 8, 2023 08:30 AM Last update on: Wed Feb 8, 2023 10:18 AM

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Tax collection growth slowed drastically in the first half of the current fiscal year due to falling customs tariff and direct taxes amid declining imports and reduced profits of firms, limiting the government's scope to spend on development activities.
The National Board of Revenue (NBR) clocked 11 per cent year-on-year growth in tax receipts, which amounted to Tk 145,431 crore in the July-December period of fiscal 2022-23.

During the same period a year prior, the tax authority recorded 17 per cent growth in revenue receipts.

As the collection growth slowed, the NBR could attain 39 per cent of the Tk 370,000 crore revenue collection target for the first half of this fiscal year.

This means the NBR will have to collect 61 per cent in the second half of fiscal 2022-23 ending in June, which is likely to be tough as the economy has gotten slower.

Data released by the NBR showed that growth of revenue collection from international trade and direct tax slowed by more than half in the first six months of the year compared to the same period in fiscal 2021-22.

Only value added tax collection growth from domestic economic activities edged up slightly to 16 per cent during the period compared to 13 per cent the previous year.

"Revenue collection data is a reflection of the slowdown of the economy," said Mohammad Abdur Razzaque, director of the Policy Research Institute (PRI) Study Centre on Domestic Resource Mobilisation.

He added that revenue receipts from customs tariff showed a slowing trend as imports fell after the authorities restricted non-essential imports through various measures.

Amid rising stress on the country's foreign exchange reserves and its subsequent fall resulting from higher imports than exports and remittance earnings, Bangladesh Bank began to impose various rules to discourage non-essentials imports.

The measures worked as Bangladesh's imports declined 2.15 per cent year-on-year to $38.13 billion in the six months ending with December in 2022 compared to a year, data from the central bank showed.

Customs tariff collection data exemplifies that. The NBR collected Tk 44,950 crore as customs tariff by posting 9.25 per cent year-on-year growth in the July-December period. The customs duty collection grew 22 per cent during the same period a year ago.

"High value imports have fallen," said Ahsan H Mansur, executive director of PRI of Bangladesh.
Besides, corporate incomes of large companies and banks have dropped for increased costs, which has affected income tax collection, he added.

Income tax receipts grew 6.25 per cent to Tk 43,959 crore in the July-December period compared to the same time the previous year, when taxmen recorded 15 per cent growth in income tax collection.

Mansur then said the slowing growth would affect the government's expenditure for development projects.
"We are already seeing this. Work of many projects has stalled," he said, adding that the development of foreign funded projects would suffer for a dearth of local funds.

As a result, the government will have to borrow more.

The government's net borrowing to finance its budget from domestic and external sources stood at Tk 31,338 crore in the July-November period of the current fiscal year, down from Tk 50,474 crore during the same period a year ago, Bangladesh Bank data showed.

To increase tax collection and reduce dependence on borrowing, revenue collection has to improve, according to analysts.
For this, systematic improvements and administrative reforms of the NBR is needed, Mansur said.

Towfiqul Islam Khan, senior research fellow of the Centre for Policy Dialogue, said the growth in collection recorded in the early months of this fiscal year was largely driven by rising commodity prices.

"Hence, slow progress in improving institutional efficacy for mobilising domestic resources regrettably did not get the due attention," he added.

Now, as Bangladesh has gotten loans from the International Monetary Fund, it has a specific target on tax revenue.
"But a business-as-usual approach will not deliver it. The current adjustments opted by the government as a response to the macroeconomic crisis will also make it difficult to mobilise revenue," he said.

Khan went on to say that formal and informal import restrictions, restrained public investment, and a slowdown of economic activities and private investment will generate lower revenue for the NBR.

"The NBR will need to improve its administrative efficacy to curb tax evasion and restrict illicit financial flows. The reforms in this area over the last decades never received the needed attention," he said.

Khan then said the Public Finance Management Action Plan, Anti-Money Laundering Strategy and many other plans concerning revenue mobilisation were shelved without proper accountability.

"The government also has to review the tax incentives and rescue tax policy from the elite capture," he added.

 
I believe in order to move on to the next level of economic growth Bangladesh needs structural reforms which hasina is either incapable of or is politically unable to perform

Y'all need a fresh mandate, a new PM, if he is good - make him the next hasina ie a civillian dictator
 
Tax collection growth on the decline
The govt tax collection declined because the BD GDP ras rose above 8.1%. This BAL govt wants to keep itself in govt power so it needs many fictions in the news media.

When the GDP figures are fictitious, no wonder, that the GDP figures are the brainchild of Hasina Bibi. the tax rate will go down. The tax collection rate is actual, but the tax-fictitious rate is real. So, it is coming down below 8%.
 
The govt tax collection declined because the BD GDP ras rose above 8.1%. This BAL govt wants to keep itself in govt power so it needs many fictions in the news media.

When the GDP figures are fictitious, no wonder, that the GDP figures are the brainchild of Hasina Bibi. the tax rate will go down. The tax collection rate is actual, but the tax-fictitious rate is real. So, it is coming down below 8%.

Tax growth has fallen from 17% to 11% growth year on year. What has that to do with GDP? Tax revenue is still growing and even if i was to make a tenuous claim that tax collection should grow at the same rate as GDP then NBR is doing well to achieve double digit growth.

You did not understand what is being reported.
 
Does that mean that Bangladeshi GDP growth figure is cooked, if your tax revenue is on decline?
Tax revenue is not declining, it's growth rate declined from last year. Last year, tax collection increased 17%, while is only 11% this year. Main reason being Import slump resulting lower import duty collection and rising production costs make Industrialists to pay less excise duty.
 
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Imports are decreasing, remittances are decreasing, and new investments are decreasing. But, the UNIQUE case with BD is its GDP is increasing tremendously.

How long this liar BAL party will keep on taking the BD citizens as a bunch of fools? A person with minimum knowledge of the economy will be surprised to see it happening for more than a decade.

People must thank the BBS.
 
Does that mean that Bangladeshi GDP growth figure is cooked, if your tax revenue is on decline?

On the contrary, in India.
The GDP figures have been faked for more than a decade. So, the ratio of tax: GDP ratio is going down so low. So it is between one real figure and another fake figure.

The BBS can easily manipulate the GDP figures. But the NBR (National Board of Revenue) cannot fake the tax collection figures.

This is the reason why the ratio is getting smaller every year. It is very natural.
 
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The GDP figures have been faked for more than a decade. So, the ratio of tax:GDP ratio is so low.

The BBS can easily manipulate the GDP figures. But the NBR cannot fake the tax collection figures.

This is the reason why the ratio is getting smaller every year. It is very natural.

So what could be the real Bangladesh nominal GDP?
 
So what could be the real Bangladesh nominal GDP?
Actually, I have no idea what is the real GDP. But, one can assume the tax collection is 15% of the GDP.

By doing the reverse calculations, one may get the real GDP figures for the last few years. Please check out the tax amount the govt collects.

Do your own calculations. I cannot do it because BAL party cronies will vehemently object to it, For them, Hasina is a Bible writer that a human being like me cannot change,
 
Actually, I have no idea what is the real GDP. But, one can assume the tax collection is 15% of the GDP.
It can not be that. In 2017-2018 fiscal year, tax collection was 2.16 trillion Taka while Govt. provided tax breaks to various industries and service sectors of whopping 2.50 trillion Taka. Our tax collection is smaller than tax break. So how can it be 15% percent of GDP? Not to mention, Bangladesh's tax collection is one of most corrupt and inefficient in the world with out of date practices and technology and huge corruption.

Bangladesh's tax collection last year was 7.8% of GDP, total revenue 9.5% of GDP and Govt. expenditure 14.7% of GDP.
 
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