NBR expects Tk 5 tr from revenue income

Relying on revenue to meet budget deficit

Savings certificates, bonds and loans taken from the bank sector are being prioritized as the biggest sources to meet the budget deficit

Mahfuz Emran : In the budget of the current financial year 2023-24, the overall deficit is estimated at Tk 2 lakh 61 thousand 785 crores. Which is 5.2 percent of the total GDP. To meet this deficit, there is a target of collecting Tk1 lakh 55 thousand 395 crores from domestic sources and Tk1 lakh 2 thousand 490 crores from foreign sources. Apart from this, Tk 5 lakh crore is expected to come from the revenue sector.
Savings certificates, bonds and loans taken from the bank sector are being prioritized as the biggest sources to meet the budget deficit. However, the accumulated debt taken by the government from internal sources has exceeded eight lakh crore rupees. On the other hand, foreign sources have always been hard to come by. As a result, the only priority of the government is to collect revenue and increase the scope. That is why a meeting of the ‘Cash and Debt Management Committee’ (CDMC) of the Finance Department of the Ministry of Finance has given instructions to increase the revenue to finance the budget deficit.
The National Board of Revenue (NBR) has been entrusted with the responsibility of implementing the directives issued by the 52nd meeting of the CDMC recently. According to the decision of the meeting, there is no alternative to increasing revenue collection to keep the budget deficit at an acceptable level due to reduction in government financing from savings bonds and increase in interest rates on bank loans. However, economists believe that the company is not very successful in collecting revenue.
As the former Chief Economist of the World Bank’s Bangladesh Residential Mission Dr. Zahid Hossain. He told, “It is a long-term problem. Despite various plans, effective initiatives in this regard are not seen so far. Increasing revenue collection means reducing budget deficit. There is no room for debate on this. Everyone agrees on this.
“One of the two methods of raising revenue is the adaptive taxation policy and non-tax revenue policy. Another is to increase the efficiency of administration in revenue collection and reduce corruption. IMF also has a guideline in this regard. This includes achieving at least as much revenue as possible within the current framework. One of the biggest issues in current revenue management is tax exemption and tax rebate. According to NBR’s calculations, the amount is Tk2.5 lakh crore. However, they did not disclose the final account. Although the tax exemption is given for a specific period and purpose, it continues for years. From the previous finance minister to the current NBR chairman, they have spoken about it. At least need to rationalize without stopping tax benefits. To what extent it will be done, it will be seen in the next budget.”
On the other hand, a senior official of NBR told without disclosing his name regarding the Cash and Debt Management Committee (CDMC) decision that the government’s dependence on the market system for internal financing is increasing after the reduction of government funding from savings bonds. The major source of market-based financing is the banking sector. Demand for financing from commercial banks has increased. On the other hand, interest rates have already increased in the market. Achieving domestic financing targets may be challenging if current conditions persist.
He said, because of this, everyone agreed that increasing revenue collection is the only solution to keep the budget deficit at an acceptable level and to continue or increase the progress of the government’s development. It is the responsibility of NBR to implement it.
However, NBR is not at ease about collecting or collecting revenue. In the current fiscal year, NBR’s revenue collection target has been set at Tk 430,000 crore. In this, the company is facing a major deficit for the first six months (July-December) of the financial year. Tk23 thousand 227 crores 19 lakhs is lagging behind the target. In December, the deficit was Tk6,78.22 crore. However, the revenue collection at the end of six months has increased by 13.89 percent compared to the previous financial year. Although nearly 88 percent of the target was achieved, NBR could not avoid a major deficit. At this time, against the target of Tk1 lakh 88 thousand 756 crore, the government has collected Tk1 lakh 65 thousand 629 crore 75 lakh.
According to the data obtained from the statistics department of NBR, the amount of revenue deficit at import and export level is Tk8 thousand 563 crore 47 lakh. At the same time, there has been a shortfall in Value Added Tax (VAT) of Tk 6,70.074. The amount of deficit in income tax sector is Tk8 thousand 592 crore 98 lakh.
In this situation, the big question is how much NBR can contribute to reduce the budget deficit. Zahid Hasan also pointed out that the tax-GDP ratio is still less than eight. If it is possible to reduce corruption by making the tax officials accountable, then it is possible to get the tax ratio close to 10 in this tax structure. In that case, there will be no need for new taxation.
“According to me, there are two ways to reduce the budget deficit – reducing expenditure or increasing revenue. In this situation of dollar crisis in the foreign exchange market, if the budget deficit increases, the crisis will intensify. In such a situation, there is no option to increase revenue.
However, there is hope that the first quarter of the fiscal year has a surplus instead of a budget deficit. According to the calculations of Bangladesh Bank, Tk6,425 crores have been paid without taking loans from the banking sector to meet the deficit budget. Tk6,615 crores of foreign debt has been repaid. However, economists think it is ‘impossible’ to avoid a budget deficit at the end of the financial year.
In the current fiscal year 2023-24, the overall deficit in the budget of Tk 7 lakh 61 thousand 785 crores has been estimated at Tk 2 lakh 61 thousand 785 crores. Which is 5.2 percent of the total GDP. Of this, Tk five lakh crore should come as revenue. There is a target of collecting Tk1 lakh 2 thousand 490 crore from foreign sources and Tk1 lakh 55 thousand 395 crore from domestic sources to meet the deficit of Tk2 lakh 61 thousand 785 crore of total budget.