A kind of stagnation has set in across the economy. There is no investment, trade and commerce are in recession, and development activities are also moving at a sluggish pace. The government is operating largely under austerity measures, putting pressure on the public exchequer. Desired levels of revenue are not being realised. In the first six months of the 2025–26 fiscal year (July–December), the revenue shortfall reached Tk46,000 crore, according to sources at the National Board of Revenue (NBR).
NBR data show that the revenue collection target for the first six months of the fiscal year was Tk231,205 crore. However, a shortfall of Tk45,980 crore was recorded across the three main revenue heads. The largest deficit occurred in income tax, amounting to Tk23,532 crore. At the import stage, the shortfall stood at Tk12,140 crore, while the value-added tax (VAT) sector recorded a deficit of Tk10,308 crore. Such a revenue scenario will pose challenges even for an elected political government.
During the period under review, the income tax target was Tk85,405 crore, but actual collection reached only Tk61,873 crore. Corporate taxpayers pay various forms of tax, including advance income tax and withholding tax, throughout the year, while individual taxpayers also contribute income tax to the state treasury. However, with income sources shrinking, the income tax sector has suffered a sharp decline.
During the tenure of the interim government, businesspeople have largely refrained from expanding their operations, resulting in a lack of investment. Government projects have also stalled, leading to a significant reduction in imports of raw materials for industry and development projects. Consequently, the government has been unable to collect expected import duties. Against a target of Tk65,000 crore, actual collection stood at only Tk52,861 crore.
VAT is payable at every stage, from import and production to marketing, and it is the largest source of revenue. During the period in question, the NBR collected Tk70,491 crore in VAT, against a target of Tk80,799 crore. High inflation and declining incomes have reduced consumption, which has in turn affected VAT collection.
In this situation, business leaders and entrepreneurs say the overall pace of the economy is slow. In such circumstances, lower growth and declining revenue are only natural. Expecting an unstable economy to achieve high levels of investment, employment and growth similar to normal times would be unrealistic. With the national election approaching, many are adopting a wait-and-see approach. They believe that once a political government assumes office, momentum may return to business and the wider economy, leading to higher revenue collection.
Mustafa Azad Chowdhury Babu, President of the Bangladesh Cold Storage Association, said: “Business turnover will increase and revenue collection will rise. If incomes do not grow, how can tax revenue increase? Investment does not come unless the law and order situation is normal. Once a new political government takes office, investment and business expansion will depend on the decisions it takes regarding tax policy, power and energy supply, law and order, and other key issues. If conditions are not favourable, why would businesspeople invest large sums of money?”
However, Shawkat Aziz Russell, Chairman of Amber Group and President of the Bangladesh Textile Mills Association (BTMA), said that even if a new government takes office, there will be no immediate change. “Even a new government will not be able to do much right away. We are now eating winter fruits and vegetables, but the seeds for cauliflower, turnips and similar crops were sown four to six months ago. Advisers did not sow any such seeds. So the next government will not be able to perform any overnight magic,” he said.
The BTMA president added: “Without new industrialisation, there will be no employment, turnover or tax revenue. Corporate tax and duties on inputs in existing sectors have been increased, but this is not a sustainable way to raise revenue. Ashik Chowdhury proudly says that Tk31,000 crore has been earned from Chattogram Port, but this has been collected by taxing our own people. Singapore earns revenue from others through shipment and cargo handling, whereas we are taxing ourselves. There is snatching, robbery and looting everywhere because there is no employment—how else will people survive?”
Data also show that people’s incomes are not rising. According to official figures, inflation increased month-on-month even in December of the outgoing year. Overall inflation stood at 8.29 per cent in November and rose further to 8.49 per cent in December, indicating a monthly increase. The data show growing pressure on household expenditure, particularly on rent, education and healthcare. The central bank’s policy of maintaining high interest rates to curb inflation has yet to deliver the desired results.
When trade and economic activity remain sluggish, achieving targeted GDP growth becomes difficult. Provisional estimates for 2025 place GDP growth at below 4 per cent—significantly lower than the more than 6 per cent growth recorded in previous years. The World Bank has forecast that growth in the current 2025–26 fiscal year may reach, at best, 4.8 per cent.
However, speaking on condition of anonymity, a senior NBR official suggested that the situation could improve. “Trade and commerce have been sluggish for a long time. When economic activity slows, revenue collection is inevitably affected. With businesses under pressure, it is also difficult to take aggressive measures to collect taxes. If businesses survive, revenue can be collected. But if excessive pressure damages enterprises, one avenue of revenue collection will be closed altogether. Once a political government comes to power, some improvement in the situation may be seen,” the official said.
Bd-Pratidin English/ AM
