Tk 3 Lakh Crore Allocated for ADP, NBR Looks for Substantial Revenue Collection

The government has finalized the Annual Development Program (ADP) of Tk 3 lakh crore for the next fiscal year. The National Board of Revenue (NBR) is hoping for substantial revenue collection driven by this massive development expenditure.

Revenue officials say that the economic flow generated by the ADP through infrastructure construction, machinery imports, supply of construction materials, contracting activities, and various service sectors could significantly increase collections from VAT, customs duties, income tax, and source tax.

According to NBR data, due to lower government spending in this sector in the current fiscal year, revenue collection has also been low. Officials say that if at least Tk 2.70 lakh crore of the Tk 3 lakh crore is spent in the next fiscal year, revenue collection from this sector could be at least Tk 27,000 crore. In contrast, it is expected to be no more than Tk 6,000-7,000 crore in the current fiscal year.

VAT is imposed at rates of 7.5%, 10%, and 15% on expenditures in this sector. Officials believe that if VAT is collected at an average rate of 10%, revenue collection would exceed Tk 27,000 crore.

Officials also mentioned that the higher the government's development spending, the more taxable economic activities increase. Particularly, a huge amount of VAT and customs duties are collected from rods, cement, electrical equipment, machinery, and import-dependent materials used in large infrastructure projects. Simultaneously, income tax and source tax are also collected from contracting firms, supplier companies, and related service sectors.

An NBR official, speaking on condition of anonymity, told Agamir Somoy (Future Time), "If a large part of the ADP is implemented, the flow of money in the domestic market will increase. This will have a positive impact on revenue collection, as well as increasing consumption and investment."

However, M. Masrur Riaz, Chairman of the private research organization Policy Exchange Bangladesh, said that development expenditure has a multi-dimensional impact on the economy. Generally, a portion of ADP spending returns to the government treasury as various types of taxes. Although the specific rate depends on the type of project, import dependence, and local value addition.

He cautioned, however, that simply announcing a large ADP will not generate the desired revenue. If project implementation delays, cost overruns, corruption, and waste are not reduced, potential revenue collection could also decrease.