Revenue collection rises 21% in July-August

Revenue collection grew by nearly 21 percent year-on-year in the first two months of the current fiscal year, due mainly to a calmer political climate compared with the same period last year, when mass protests led to the fall of the Awami League government.

While tax analysts have welcomed the rise, revenue officials are more cautious. They say the increase is "nothing extraordinary", and it will take time to gauge the real trend.

In the July-August period of fiscal year (FY) 2025-26, the National Board of Revenue (NBR) collected Tk 54,423 crore, according to the board's provisional data.

All three main revenue streams -- income tax, value-added tax (VAT) and customs duties -- contributed to the rise. VAT receipts were the standout, beating the monthly target with a 4.80 percent gain.

Local-level VAT collection amounted to Tk 22,437 crore, up from Tk 16,854 crore a year earlier, marking a 33.13 percent increase.

Income and travel taxes rose to Tk 14,738 crore, up 23 percent on the same period last year. Customs duties collected from international trade rose 6.61 percent to Tk 17,248 crore due to higher imports after restrictions were eased.

"NBR's growth is simply satisfactory," said Prof M Abu Eusuf, executive director of local think tank Research and Policy Integration for Development (RAPID). "Better political environment, and higher revenue collection efforts might have contributed to the growth," he said.

Since the comparison is point-to-point, collections now appear stronger as instability depressed revenues a year ago. Early filing of returns and higher source taxes may also have helped, he added.

Prof Eusuf said the active role of the current tax administration and recent reforms, including recommendations by the White Paper committee, had created a positive impact. "So overall, things are moving in a more positive direction," he said.

An NBR official, however, told The Daily Star that July-August revenue growth is "nothing extraordinary".

"We have to wait a few more months to understand the real trend. Last year, many overdue payments were cleared in September, so the next month's data may reflect lower growth," the official said, preferring anonymity.

Despite the increase, the NBR missed its two-month target by 11 percent, collecting Tk 54,423 crore against a goal of Tk 61,000 crore. The board has set a full-year revenue target of Tk 499,000 crore.

Prof Eusuf suggested the NBR should accelerate revenue growth by expanding direct taxes, broadening the tax net and investing more in automation.

At a seminar at the Dhaka Chamber of Commerce and Industry last week, NBR Chairman Md Abdur Rahman Khan talked about the country's low tax-to-GDP ratio.

"Last year, our tax collection was around Tk 3.70 lakh crore, more precisely Tk 3.71 lakh crore. But in percentage terms, that is still very low," he said.

"When compared with GDP, the trend has been declining over the past decade. The absolute numbers may look impressive, like a big flower in the statistics, but the reality is different. At one point, our tax-to-GDP ratio had reached 12 percent.

"In the fiscal year before last, it was said to be around 7.3 percent. This year, according to rough calculations and our development partners, it has fallen further, to around 6.6 percent," said the NBR chief.

Khan added that a prominent political leader had recently promised to allocate 5 percent of GDP to health if elected. "But if our tax-to-GDP ratio is only 6.6 percent, then what will be the condition? This fundamental issue gets little attention," he said.

In August, Bangladesh Bank Governor Ahsan H Mansur also voiced frustration over the country's weak tax-to-GDP ratio.

"Bangladesh is not doing a good job in terms of revenue collection. We need to focus on that constructively," he said.

As global aid flows shrink and traditional donor priorities turn inward, Bangladesh must focus on domestic resource mobilisation, he said.