Decomposition of Revenue Sources
NGO News Desk :: The revenue structure in Bangladesh is not so strong because of its high dependency on one or two sources (Benson& Clay, 2004). Revenue needed for expenditure purposes is collected mainly from three sources-tax revenue, non tax revenue and the exrternal source that is foreign aid and grants. Total revenue is collected either from tax or from non-tax sources. Of the total revenue, tax revenue consisted of 80.9 to 83.42 percent over the period between FY 2007-08 and FY 2012-13 and the remaining came from non-tax sources. Of the total tax revenue, nearly 95-96 percent is collected by National Board of Revenue (NBR).
NBR taxes mainly come from income and profit, Value Added Tax (VAT), import duty, export duty, excise duty, supplementary duty and other taxes and duties. In contrast, non-NBR taxes consist of narcotics duty, motor vehicles tax, land tax and stamp (non-judicial). Non-tax revenue is collected from dividend and profit, interest, administrative fees, penalty and forfeiture, services, rent and leasing, tolls and levies, non-commercial sale, defense, non- tax receipts, railway, post office department, T&T Board, and capital receipts.
From FY 2007-08 to FY 2011-12, the NBR revenue collection surpassed the targets, but from FY 2008-09, non- NBR revenue started to fall short of the target, although it was above the target in previous years. Total tax collection has started to fall below the target since FY 2012-13. In case of collection of NBR and non-NBR taxes, the actual collections were Tk. 120819.8 crore and Tk. 4612 crore in FY 2013-14 against the target of Tk. 125000 crore and Tk.5178 crore. Moreover, in FY 2012-13 both NBR and non-NBR have failed to satisfy the target of revenue collection with total shortage of Tk. 40777.5 crore. In the first half of the current fiscal year of 2014-15, Tk.2000 crore has fallen short of its target; NBR able to collect 58449 crore (39.22 percent of the total target 149320 crore) which is 16.55 percet higher than the same time of the previous year where the target was fixed to collect 60453 crore for first half of the FY 2014-15.
The highest shortfall has been found in collection of VAT(local), largely caused by sluggish business activity. The wing faced Tk 24097 crore shortfall against its target for the period where the shortfall was Tk 20136.45 crore in the same period of previous fiscal year that is a increase of Tk. 3960.55 crore or 20 percent increase in the shortfall although the VAT collection has increased by 18.25 percent.
Lately, government is giving emphasis on direct tax i.e. income tax in the first quarter of the current fiscal year. The collected income tax is Tk 18721 crore where the target was Tk 56580 crore that is 33.09 percent of the target is collected where 67 percent of the target is yet to be collected, though the present business scenario says that will be very challenging.
In the first half of FY 2014-15, the import duty amounts to Tk 6965 crore where the target was set to Tk 14376.7 crore, denotes that 48.45 percent of the target has been collected. But collection of remaining duty will be difficult because of increase in cancellation of LC opening. In the H1 of FY 2014- 15, the cancelation of LC has increased by 24.54 percent worth of USD 890.45 million were cancelled in the first six months of the FY2014-15 while the figure was USD 728.71 million in the same period of the FY 2013-14. LCs for import of items worth of USD 623.34 million were cancelled in the first half of the FY 2012-13.
The target of non tax revenue is Tk 27662 crore, but a total of Tk 7279 crore has been collected till October 2014 which is
26.31 percent of the total target whereas it was Tk 11464 crore in the same period of the previous year, represents a
36.2 percent decrease compared to the same period of the previous fiscal year. This revenue collection may face a huge short fall because the major non tax revenue payer like Bangladesh Bank (BB), Bangladesh Telecommunication Regulatory Commission (BTRC) and land revenue pay less than the previous year.
Tax revenue from most of the sources has depicted positive growth till December, 2014 compared to the December, 2013. The rate of growth in major tax sources like VAT, Income tax and import duty are 17.90 percent, 17.78 percent and 9.07 percent respectively.
