Finance Minister AMA Muhith has said that it will be very tough to cover the shortfall in the VAT collection target in the current fiscal year due to non-implementation of the new VAT law.
“We will prepare a plan for alternative sources of earning to meet up the deficit which would be exactly or less than Tk20,000 crore,” he said.
The minister made the comments while talking to the media after a meeting of Cabinet Committee on Public Purchase yesterday afternoon.
Muhith, however, said he is not keen to talk about the matter now.
“At the end of this month, I will talk about how the shortfall in VAT collection will be covered instead,” he said.
“I am having a tight schedule due to a number of meetings. But, we would discuss the matter to find a solution at the end of July,” he further said.
According to him, the Finance Ministry had planned to earn an additional Tk20,000 crore by enacting the VAT.
But, the deferral in implementing the law has raised the possibility of the earning to drop, he observed .
The controversial law was set to be effective from July 1.
But, Prime Minister Sheikh Hasina during the budget session requested him to postpone the implementation of the uniform 15% VAT for at least two years.
The national budget of the new fiscal year was in the House without execution of the law.
Last week , the Finance Division estimated that current budget deficit is likely to widen further to 7.46% of gross domestic product by the end of the new fiscal year despite the National Board of Revenue imposing more supplementary duties on imports.
The budget deficit will increase to Tk166,000 crore from the current target of Tk112,276 crore. The total deficit will rise to Tk44,834 crore while the size of the total GDP outlay will be Tk2,223,600 crore.
Finance Division officials said the NBR may collect Tk205,000 crore compared to earlier target of Tk248,190 crore in tax.
According to the preliminary data, the NBR exceeded the revised target of overall tax collection of Tk185,000 crore last fiscal year. The achieved amount is Tk185,071 crore.
“It is a good news that the NBR achieved the revised tax collection target last fiscal year though the actual target was Tk170,000 crore,” said an official.
The total tax collection target set for the NBR in the last fiscal year was Tk203,152 crore.
NBR Chairman Nojibur Rahman, on his Facebook post, said the if NBR was not so engaged with the efforts to implement the VAT law, there would have been more collection last fiscal year.
According to the NBR, an additional amount of Tk22,579 crore could be collected as VAT, especially from large business organisations this fiscal year, if the new law was implemented.
Finance Division sources said the deficit could be wider than Tk166,000 crore this fiscal year if the planning ministry fails to implement development projects of Tk57,000 crore funded by foreign sources.
According to the Planning Commission, an amount of up to Tk40,000 crore foreign aid, out of Tk57,000 crore, can be disbursed in the current fiscal year.
However, State Minister for Finance MA Mannan said the current fiscal year’s budget deficit will increase by up to Tk20,000 crore, which will be met by loans from commercial banks.