April’s revenue growth hits 19%, riding on high import prices

Despite the country's economic slowdown, the National Board of Revenue (NBR) has recorded a year-on-year revenue growth of approximately 19% for April, marking the third highest growth rate in the past ten months.

The increase has been attributed to soaring import prices, which have also affected local consumers, leading to significant inflation over the past two years. 

However, despite the positive trajectory, the NBR is falling short by over Tk24,000 crore from its target for the first ten months. Experts foresee a substantial revenue shortfall for the fiscal year, even after the government reduced the target by Tk20,000 crore to Tk410,000 crore.

Moreover, officials at the NBR say they feel helpless as they are assigned very high revenue collection targets.

NBR sources said revenue in April decreased by about 12% compared to the previous month. The revenue growth was around 16% from July to April of the fiscal 2023-24, according to the sources. Besides, import tax growth in April alone was around 21%, the highest among the three main wings of the revenue authority – income tax, VAT and import tax.

The Chattogram Custom House collected over 80% of the total import tax, amounting to about Tk56,000 crore from July to April, reflecting a growth of over 14%. In April alone, it saw a 32% increase in import tax revenue, driven by increased import volumes and efforts to curb tax evasion through misdeclaration.

"In April, import growth through Chattogram port was 12%. However, the main reason for the significant revenue increase at this customs house was our focus on curbing misdeclaration," Mohammad Fyzur Rahman, commissioner of Chattogram Custom House, told The Business Standard.

He further said, "We initiated collecting import duties based on actual valuation, which helps control misdeclaration and increase government revenue."

Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), opined that the significant depreciation of the taka's exchange rate and high local inflation are major reasons behind the revenue growth.

"Due to the exchange rate, the value of imported goods have increased, leading to higher import taxes. Moreover, inflation in the local market has resulted in increased VAT collections," added the economist. 

NBR sources stated that year-on-year income tax and VAT collection growth in April was 20% and 16%, respectively.

According to the latest data released by the central bank, settlements of import letters of credit (LC) decreased by about 15% from July to February. However, import tax collection from July to April increased by over 11%. 

Data from the Bangladesh Bureau of Statistics (BBS) indicates that inflation was close to 10% last year. BBS's latest data shows that inflation was 9.74% last April. Due to high inflation, consumers have to spend more, a portion of which is received by the government as VAT and taxes. 

According to NBR sources, in the last 10 months of FY24, the NBR's revenue collection target was Tk313,584 crore, but it collected about Tk290,000 crore.

Target becomes tougher for NBR

To meet the revenue target of FY24, which was reduced by Tk20,000 crore, the NBR will have to collect about Tk121,000 crore within the months of May and June, which experts say is almost impossible.

The revenue authority collected less than Tk30,000 crore in April, according to NBR sources. If this collection trend continues in the last two months of FY24, the revenue shortfall could be as high as Tk60,000 crore, they added. 

On the issue, Dr Ahsan H Mansur said, "Despite the increasing trend, NBR's revenue shortfall may exceed Tk40,000 crore."

However, the revenue earning trend in the last two months has been higher than in previous months.

While speaking at a programme organised by Centre for Policy Dialogue (CPD) recently, NBR Chairman Abu Hena Md Rahmatul Muneem said, "The NBR feels helpless due to being assigned significantly higher revenue collection targets." 

"The targets set by the Finance Ministry do not consider the capacity of the NBR but are based on the previous year's targets.

"We have to work year-round to achieve these goals, leaving very little opportunity to think about innovation," he added.