Revenue growth slows in H1 FY23

Revenue collection growth has slowed down during the July-December period of the current fiscal year 2022-23 comparing to the same period of last fiscal year. 

According to the National Board of Revenue (NBR) data, revenue collection grew by 9.11 per cent in the first six months of FY23 while it 18.58 per cent during the same period of last fiscal year.

The National Board of Revenue (NBR) saw the slowdown in revenue growth at a time when the International Monetary Fund (IMF) is putting pressure on the government to boost revenue and raise tax-GDP ratio to meet the growing demand of expenses.

The NBR provisional data showed that in the first half of FY23, the revenue board collected Tk 142,973 crore, around 10 per cent less than the target of Tk 158,086 crore set for the first six months of the current fiscal year.

However, the board will have to collect more than 61 per cent of revenue in the second half of the current fiscal year to achieve the actual target set for FY23 as it has attained only 38.64 per cent of the target in the first six months of this fiscal year.

During the first half of the current fiscal year, the board collected Tk 53,391 crore out of the total revenue from VAT at local stage, followed by Tk 44,939 crore at import and export stage, and Tk 44,642 crore at direct tax, including income and travel tax.

The board officials claimed that the government’s cautious and strict measures in releasing project funds, increasing letter of credit (LC) margins for luxurious products in the wake of dwindling forex reserves, decreased imports diminishing import revenues and affecting the overall revenue collection.

Experts opined that the economic slowdown might have caused the revenue shortfall. Though the country is facing economic headwinds, lack of the revenue administration’s capacity and tax evasion fuelled the shortfall, according to them.

Commenting on the matter, former World Bank Dhaka office lead economist Zahid Hussain told The Business Post, “Last year, Bangladesh witnessed an abnormal growth as the major economic activities were stuck and slower during the pandemic.”

“This year the economic slowdown including reduction of the purchasing power of consumers and decrease in imports might have caused the slower revenue.”

“The revenue administration also lacks the capacity as it cannot collect more money as revenue collection is supposed to a hefty growth because of inflationary pressure,” he added.

“The price hike of commodities put the consumers under more pressure, making a dent in their savings but increase in the profit margin of the businesspeople. The revenue board is yet to collect more revenue from the profit margin,” the economist continued.

He further said that it is clear that offering opportunities by the government to bring back laundered money home is yet to benefit the national exchequer as the income tax revenue is slowest in the overall collection and gains around 9 per cent in the first half of this fiscal year while it was more than 21 per cent in the same period of last fiscal year.”

IMF deputy managing director Antoinette Monsio Sayeh has also laid emphasis on revenue generation and raising the tax-GDP ratio in the meetings with Prime Minister Sheikh Hasina, Finance Minister AHM Mustafa Kamal and BB governor Abdur Rouf Talukder.