Revenue collection growth reduced by half in March this year from a year ago, suffered by decline in income and customs tax receipts amid falling corporate earnings and a downturn in imports, which analysts say is likely to weigh on the government’s budget spending, especially for development.

Value-added tax (VAT), the biggest source of revenue for the state, was the only saviour that helped the National Board of Revenue (NBR) log 4.3 per cent higher growth in overall revenue to Tk 29,473 crore in March from Tk 28,254 crore a year ago, according to preliminary data released by the NBR yesterday.

Collection from VAT, an indirect tax paid by consumers, soared nearly 18 per cent year-on-year to Tk 10,501 crore in March.

On the other hand, income tax collection decreased 2.8 per cent year-on-year. In March, taxmen logged Tk 10,648 crore, down from Tk 10,958 crore a year ago.

Customs duty collection from imported items declined 1.37 per cent year-on-year to Tk 8,182 crore this March.

Including March’s collection, the NBR’s total receipts stood at Tk 225,513 crore in the first nine months of the current fiscal year beginning from July 2022.

The amount was 8.3 per cent higher from the same period a year ago, when the NBR posted more than 14 per cent year-on-year growth.

Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development, said the slowdown in revenue collection will further constrain Bangladesh’s fiscal space or spending capacity from its own coffer.

And if the collection growth continues to slow down, the government will have to cut public spending, particularly development spending, this year and next year to avoid excessive borrowing from the banking sector and other sources.

The government may also need to reduce the subsidies it provides to various sectors, he added.

Razzaque then said the slowdown in collection makes it obvious that the NBR would miss the tax collection target of Tk 370,000 crore for the current fiscal year.

Until March, the NBR logged three-fifths of the target, meaning that it needs to collect roughly Tk 145,000 crore in the remaining three months of the fiscal year ending in June.

It is likely to miss the revenue collection target of Tk 345,630 crore given by the International Monetary Fund (IMF) as a part of its $4.7 billion loans.

“Meeting the IMF’s target will be very difficult too,” he added.

The Centre for Policy Dialogue earlier projected that overall revenue collection shortfall from the government’s target would be approximately Tk 75,000 crore if the current trend of revenue mobilisation persists.

During July-March of fiscal year 2022-23, the NBR logged Tk 71,227 crore in direct tax collection, registering 4.87 per cent year-on-year growth.

VAT receipts soared 15.4 per cent year-on-year to Tk 86,905 crore in the nine-month period.

At the same time, customs tariff collected on imported goods grew 3.6 per cent year-on-year to Tk 67,380 crore, according to the NBR.