Perhaps not to anyone’s great surprise, revenue collection is once again set to fall short of the target this year. The government assigned the National Board of Revenue to collect a total of Tk 296,201 crore in FY 2018-19. But the NBR managed to collect only about Tk 153,419 crore so far, which means that it will have to collect more than Tk 142,000 crore in the remaining three months to meet the government’s aim—an impossible task. The Centre for Policy Dialogue, in an analysis last month, said the total revenue shortfall comprising both tax and non-tax revenue might reach about Tk 85,000 crore if the current trend in revenue collection continues.
The ramification of this massive shortfall will obviously be manifold. And the government will have to make up for the shortfall, most likely, through borrowing. Which may “overheat” the loan market. Apart from that, there are other economic consequences of this deficiency—including implications for budgetary policy. And the government may have to forgo certain projects if it fails to make up the budgetary gap.
The question may arise as to how the NBR failed so miserably to get even close to the targeted revenue collection. But the fact is that the government, like previous years, has set a target that was impossible to achieve from the very beginning. This begs the question why it continues to set such unrealistic revenue targets—as failure to meet them only creates chaos and uncertainty in the end.
The government should set more realistic objectives for the NBR in future to stop this from recurring. And if it wants the NBR to succeed in the types of targets it has been setting, then it must recognise the need for reforms, which haven’t been possible because of the government’s own shortcomings.