The declining rate of growth in total revenue collection since Fiscal Year 2011-12 together with failure to achieve the potential of higher revenue mobilisation is likely to shrink development financing, said an Unnayan Onneshan (UO) report.
The independent multidisciplinary think tank in its monthly publication of Bangladesh Economic Update November 2015 reveals that the rate of growth in revenue mobilisation has been on the decline since FY 2011-12, reported the United News of Bangladesh.
Actual mobilisation of total revenue grew by 23.3 per cent in FY 2011-12, whereas the rate of growth decline in the subsequent years and stood at 11.8 per cent, 9.4 per cent and 3.98 per cent in FY 2012-13, FY 2013-14 and FY 2014-15 respectively.

Furthermore, it is estimated that Bangladesh has the potential to increase the mobilisation of its revenue up to 22 per cent of gross domestic product (GDP) whereas the total revenue mobilisation as per centage of GDP stood at 10.89 per cent, 11.65 per cent, 11.66 per cent and 12.09 per cent in FY 2011-12, FY 2012-13, FY 2013-14 and FY 2014-15 respectively.

The average revenue mobilisation as percentage of GDP during the last four years stood at 11.57 per cent in Bangladesh compared to 19.4 per cent in India, 18.9 per cent in Nepal, 13.7 per cent in Pakistan, and 13.4 per cent in Sri Lanka, finds the UO.

According to the latest statistics, total collection of revenue during the first five months (July - November) of the FY 2015-16 has stood at Tk. 544.08 billion against the total target of Tk. 2084.43 billion. Taking account of the previous years’ trend, the UO forecasts the total collection of revenue may fall short of the target by Tk. 375.91 billion in the current fiscal year.

The think tank shows that the rate of growth in collection of total tax revenue decreased by 3.8 percentage points during the period of July-September of FY 2015-16 compared to the corresponding period of FY 2014-15. In July-September of 2015-16, the rate of growth in total tax revenue has become 10.3 per cent whereas the rate was 14.1 per cent during the same period of the previous fiscal year.

Of the total tax revenue, National Board of Revenue (NBR) tax revenue grew by 20.16 per cent in FY 2011-12, 12.82 per cent in FY 2012-13, 7.83 per cent in FY 2013-14, and 11.25 per cent in FY 2014-15 while Non-NBR tax revenue grew by 9.33 per cent, 13.43 per cent, 11.84 per cent, and 4.64 per cent respectively during the corresponding period.

The UO shows that the rate of growth in collection of NBR-Tax decreased by 4.9 percentage points during the period of July-September of FY 2015-16 compared to the corresponding period of FY 2014-15. In July-September of 2015-16, the rate of growth in NBR-Tax has become 9.6 per cent whereas the rate was 14.5 per cent during the same period of the previous fiscal year.

Taking account of the unsatisfactory performance in collection of income tax which is proposed to be the largest source of revenue and critical to the total revenue mobilisation, the think tank evinces that the rate of growth in collection of income tax decreased by 4.6 percentage points during the period of July-September of FY 2015-16 compared to the corresponding period of FY 2014-15. In July-September of 2015-16, the rate of growth in income tax has become 10.8 per cent whereas the rate was 15.4 per cent during the same period of the previous fiscal year.

The research organisation further demonstrates that the rate of growth in collection of Value Added Tax (VAT) decreased by 3.4 percentage points during the period of July-September of FY 2015-16 compared to the corresponding period of FY 2014-15. In July-September of 2015-16, the rate of growth in collection of VAT has become 9.4 per cent whereas the rate was 12.8 per cent during the same period of the previous fiscal year.

As regards the total non-NBR tax, the research organisation finds that the rate of growth in collection of non-NBR tax increased by 16.6 percentage points during the period of July-September of FY 2015-16 compared to the corresponding period of FY 2014-15. In July-September of 2015-16, the rate of growth in collection of non-NBR tax has become 21.3 per cent whereas the rate was 4.7 per cent during the same period of the previous fiscal year.

Referring to the higher interest payment due to deficit financing induced government borrowing from both domestic and foreign sources, the UO shows that total interest payment increased by 11.18 per cent during July’15 compared to July’14 whereas it decreased by 30.83 per cent during July’14 compared to July’13.