Higher imports put revenue on positive track

The government's revenue collection witnessed positive growth after seven months of coping with the blows dealt by the Covid-19 pandemic.

In addition to 1.55% growth in September, the National Board of Revenue (NBR) reported growth in the first quarter of the current financial year. 

NBR officials said tariff collection had exceeded expectations as imports had increased in July and September. On the other hand, there was an increase in income tax revenues as the time for filing tax returns is approaching.

However, the NBR still lags behind the revenue collection target.

According to NBR sources, in the first quarter of the current fiscal year, Tk48,017 crore came from customs, VAT, and income tax, and growth was 0.67%. During the same period in 2019, when the economy was in a normal state, Tk47,688 crore was collected.

On the other hand, revenue collection grew by 1.55% in September alone, though the NBR slipped into negative growth in March when the pandemic hit the country.

Experts believe that this increase in revenue collection based on imports is temporary.

Dr Ahsan H Mansur, executive director of the Policy Research Institute, said many essential products had not been imported since the beginning of the year. 

He said global trade was pretty much stagnant for a few months and that is why imports increased in the last two months. "Revenue collection has also increased based on that. However, it cannot yet be said whether this growth is sustainable or not." 

According to NBR sources, the highest growth of 6.4% in the first three months of the fiscal year came from customs duties on imported and exported goods. The NBR received Tk15,902 crore in revenue from this sector.

Customs officials said large quantities of goods previously ordered had entered the country in September. Imports of cement clinkers, steel materials, and machinery through Chittagong port had increased.

The income tax sector also grew along with the customs. The July-September quarter saw a 4.92% increase in income tax collected from individuals and companies. Revenue collected from this sector was Tk15,373 crore.

Officials said the income tax sector had gained momentum since September due to the obligation to file tax returns for the fiscal year 2020-21 by November 30. Moreover, this sector is experiencing growth as 85% of the total tax collected came from source tax. Travel tax collection also increased during this period.

In the first three months of the financial year, revenue collection from the VAT sector remained in crisis like before. Revenue in this sector, which is dependent on consumption, declined by more than 7.7% compared to the same period last year.

On the other hand, the NBR lags behind by Tk6,677 crore compared to the target of the first quarter of the current financial year in the VAT sector, though the government announced VAT as the main source of revenue collection targeting automation.

NBR officials said consumer spending in the domestic market decreased due to the decline in people's income, even though the government had re-opened the economy. The VAT sector is in negative growth due to low consumption expenditure.

Although the economy came to a standstill due to the pandemic, the NBR was given a revenue target of Tk330,000 crore in FY2020-21 with a growth target of about 33% compared to last year. Of this, Tk128,873 crore was set as the highest target in the VAT sector.

Besides, a target of Tk105,475 crore was set in the income tax sector, and Tk95,652 crore in customs.