FROM PAGE B1
He warned that domestic borrowing carries serious risks. “It creates serious challenges, including fuelling inflation and potentially crowding out private sector investment,” he said.
Without fundamental reform in revenue administration, any substantial increase in collections is “almost impossible”.
Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said weak imports will further dampen revenue in the final quarter.
“If the government depends heavily on banks, it will affect credit flow to the private sector,” he said, warning that without revenue growth, more extreme measures such as money printing could not be ruled out.
Describing the broader pattern, Razzaque said, “The revenue target is not binding, it’s aspirational. We set targets and repeatedly fail to meet them. We are stuck in a Catch-22.”
“Big budget, big revenue deficit, and the NBR failing to raise revenue -- this is the typical Bangladesh story,” he added, noting that despite talk of reforms, “we are not seeing the momentum or a firm commitment.”
He mentioned the IMF’s recent decision to withhold a loan instalment, citing that the country has failed to implement agreed reforms in the revenue and banking sectors.
This decision by the multilateral lender adds to the country’s pressure. “It sends a signal about reform commitment, and other development partners take such signals seriously,” Razzaque said.
Within the July-March figures, VAT from domestic activity was the largest contributor at 38 percent of total collection, rising 13.66 percent year-on-year to Tk 1.09 lakh crore. Direct taxes accounted for 33.5 percent, climbing 11.25 percent to Tk 98,501 crore, while import tariffs grew more modestly at 7.77 percent to Tk 80,223 crore.
Facing mounting pressure, the NBR is eyeing structural changes for next year. Speaking at a pre-budget discussion earlier this month, NBR Chairman Md Abdur Rahman Khan pledged to strengthen enforcement to curb tax evasion and gradually reduce existing tax exemptions aiming to raise revenue collections.
He informed that the board is considering a range of measures to strengthen revenue collection in the upcoming fiscal year 2026-27 (FY27), including the reintroduction of a wealth tax, a new inheritance tax, higher rates for the ultra-rich, and a rationalisation of existing tax exemptions.
“We are exploring the possibility of reintroducing a wealth tax,” Khan said at the event, noting that Bangladesh had such a levy from 1963 until it was abolished in 1999.
A committee has been formed to examine the matter.
Khan added that the NBR is weighing the introduction of an inheritance tax, at least on a limited scale, with a focus on high-value property transfers.
On tax exemptions, Khan signalled a gradual shift away from the status quo. “We are committed to gradually phasing them out and bringing beneficiaries into the regular tax regime.”
The NBR also plans to raise the top marginal income tax rate for ultra-rich individuals from 30 to 35 percent, a measure tentatively set for FY28.
More immediately, he said the NBR is considering raising the tax rate for individuals earning over Tk 1 crore annually by around five percentage points from FY27.