Revenue Collection Drops by 3,408 Crore Taka During Yunus’s Term

The law and order situation significantly deteriorated in July and August due to anti-government movements, which had a negative impact on business activities. The instability created during this period was clearly reflected in revenue collection, and the situation has not yet been recovered.

In the first five months of the 2024-25 fiscal year (July-November), revenue collection decreased by 3,408 crore Taka compared to the same period last year, a reduction of 2.62%.

The revenue collection in November shows an even more concerning trend. Compared to November of the previous fiscal year, revenue collection in November this year has decreased by 8.95%.

According to updated statistics released on Wednesday, the National Board of Revenue (NBR) collected a total of 1,26,777 crore Taka in the first five months of the current fiscal year. In comparison, the revenue collection during the same period last year was 1,30,185 crore Taka, which marked a growth rate of 14.27%.

However, the NBR is facing a shortfall of 42,237 crore Taka in revenue collection for the first five months of the current fiscal year. This trend is continuing due to slow economic activities in various sectors such as imports, exports, and production.

According to NBR data, the revenue collection in the first four months of the fiscal year was 1,01,281 crore Taka, which is 1,055 crore Taka less than the same period last year, a 1.03% decrease.

August was the worst month among these four months. During that time, the country was without a government for three days, which was unprecedented. With almost 500 attacks on police stations and murders, law enforcement agencies became largely inactive. Business owners were hesitant to bring goods into warehouses or factories despite paying customs duties. In August, revenue collection saw a 14.30% decline.

After August 5, many large industrial groups shut down their companies due to political revenge, with allegations of links to the ruling Awami League. The owners of these companies were arrested and sent to jail. As a result, many factories belonging to these groups were closed.

Beximco Group alone shut down more than 32 factories, and the production at 9 factories of the S Alam Group stopped due to the closure of imports. One of the largest factories of Gazi Group in the country was completely destroyed by fire, and production at several other factories also ceased in August. The shutdown of hundreds of factories has put significant pressure on the economy, resulting in a revenue shortfall.

The situation did not improve much in November either. Although there was no major political instability, revenue collection in November dropped by 8.95%.

The July protests caused a near 10-day standstill in import and export activities. With disruptions in production and supply, revenue collection fell by 7.12% that month.

However, the situation slightly improved in September. Business activities returned to normal, and revenue grew by 2.03% that month.

Although NBR saw growth in import and income tax collection, the revenue from VAT dropped by almost 5% due to reduced consumer spending caused by inflation. As a result, a slight increase in revenue was recorded in October.

To cover the revenue shortfall, the government recently increased VAT, supplementary duties, and excise duties on more than 100 goods and services. However, the extent of these hikes has sparked strong criticism.

According to the latest data, the revenue shortfall had increased by 10,000 crore Taka compared to the previous month, reaching 42,000 crore Taka by November.

The NBR is also concerned about the decline in revenue. To meet the revenue gap and fulfill IMF conditions, 67 goods and services have recently seen tax hikes. However, this has increased the tax burden on the general public, which is being widely criticized.

While the government claims that there was no IMF pressure behind the VAT and tax hikes, the conditions for loans from the IMF include directives to increase taxes and VAT.

Economists suggest that the revenue collection pace is not increasing due to Bangladesh Bank’s contractionary monetary policy. They recommend a gradual shift away from this policy to improve revenue collection.

Economist Dr. Mahfuz Kabir has stated that if the contractionary monetary policy is not eased, revenue collection will not increase. To boost investment, interest rates on loans should also be reduced.