For the first time in the country's history inflation data was released in a quarterly format, doing away with the global standard practice of releasing monthly data -- much to the criticism of economists.

In the last quarter of fiscal 2016-17, inflation edged up about 44 basis points from the previous quarter to 5.72 percent, according to the data unveiled by Planning Minister AHM Mustafa Kamal yesterday.

The reason for the switch to quarterly reporting put forward by Kamal was the veracity of the monthly data: the Bangladesh Bureau of Statistics is unable to capture the monthly changes in the Consumer Price Index timely.

“If data is released every month, in many cases the data is not accurate,” he said.

The switch in reporting frequency comes at a time when inflation, a measure of changes in the prices of a basket of goods and services, is on the rise owing to a spiral in the prices of rise, Bangladesh's staple food.

For instance, inflation stood at 5.03 percent in December last year, which crept up to 5.15 percent, 5.31 percent and 5.39 percent in the succeeding three months respectively.

“The decision to switch from monthly to quarterly CPI is a step in the wrong direction,” said Zahid Hussain, lead economist of the World Bank's Dhaka office.

The government move makes it the work of analysts and policymakers much harder, as they will need to base their inferences, forecasts and economic decision-making on hard and current data.

Almost everything that the government and the Bangladesh Bank decide is justified by how the data are moving lately.

And those decisions are viewed by the public and other stakeholders -- including the multilateral financial institutions, investment banks, rating agencies, development partners, and civil society -- against the underlying data, he said.

The importance of sound and accurate early estimates of economic trends is of utmost importance to national economic authorities for the decision‐making process.

“All over the world, an increasing number of countries are producing high frequency economic data.  Why BBS is moving in the opposite direction is hard to fathom,” he added.

Kamal had earlier said the BBS will continue to prepare data on a monthly basis, which will be made available on the statistical agency's website. As of 6pm yesterday, no monthly data past the month of March was available.

Between the months of April and June this year, both food and non-food inflation went up, according to the planning ministry data.

In the last quarter of fiscal 2016-17, food inflation stood at 7.27 percent, up from 6.74 percent in the previous quarter. A year earlier, it was 3.96 percent. 

Non-food inflation during the quarter stood at 3.47 percent, in contrast to 3.12 percent the preceding three months.

Inflation rose mainly due to the increase in prices of rice, whose stock in government warehouses is on the decline and production too was hampered due to natural calamity.  On July 9, the stock of rice stood at 1.67 lakh tonne.

The government took various steps to increase the stock but the rice price did not come down. Coarse rice is still selling at nearly Tk 48.

Meanwhile, inflation stood at 5.44 percent last fiscal year, down from 5.92 percent logged in for fiscal 2015-16.

Food inflation was 6.01 percent last fiscal year, up from 4.90 percent a year earlier. Non-food inflation was 4.61 percent, down substantially from fiscal 2015-16's 7.43 percent.

The overall inflation declined in fiscal 2016-17 from a year earlier because of a significant decline in non-food inflation, Hussain said. “But the decline masks the steep rise in food inflation.”

The aggregate demand growth slowed in fiscal 2016-17 due to 15 percent decline in remittances and depressed earnings in garments.  Monetary restraint also helped, he said. The rise in food inflation reflects mostly rice price increases due to cost push factors such as high tariffs on rice imports as well as production shortfalls due to early floods and blast outbreak and a decline in public stocks.

Measures taken recently by the government such as reduction of duties, allowing zero-rated letters of credit margin requirements for rice imports and the government-to-government procurement of rice from Vietnam should help ease rice prices in the immediate future. 

The BB should maintain continuity in its forthcoming monetary policy statement so that the success achieved in reducing food inflation is sustained, Hussain added.   

Some 40 percent of the total value-added tax and supplementary duty collected in a year by the National Board of Revenue comes from only 10 firms -- a startling detail for a $220 billion economy that is growing fast.

The companies are from cigarette, gas, mobile operator and power sectors, according to data from the Large Taxpayers' Unit, VAT.

The disclosure also suggests extensive tax evasion by others.

“This indicates that VAT and SD collection from domestic economic activities is vulnerable to the fortunes of a few institutions,” said Zahid Hussain, lead economist of the World Bank's Dhaka office.

Bangladesh has 8.5 lakh firms registered under VAT but only 32,000 submit returns and pay VAT, much to the vexation of Finance Minister AMA Muhith.

“This makes it clear that VAT is confined to a limited area,” Muhith said in his budget speech last month.

Data showed that 157 firms accounted for 55 percent of the total of Tk 56,080 crore collected as VAT and SD from domestic economic activities in fiscal 2015-16.

Of the sum, Tk 30,417 crore came from LTU-VAT, 75 percent of which, in turn, were from 10 firms.

VAT paid by the top revenue-generating firms such as British American Tobacco, Dhaka Tobacco Industries, Petrobangla, Grameenp-hone and Titas Gas stood at Tk 26,045 crore in the first 11 months of fiscal 2016-17.

The amount was 72 percent of the total VAT collected by the LTU in the just concluded fiscal year, according to preliminary data released by the NBR.

Data by the NBR's field office also showed that five sectors -- cigarettes, gas, mobile operators, pharma-ceuticals and banks -- provide 88 percent of the LTU's total collection in a year.

“This indicates the narrowness of the existing tax base and the scope to evade VAT,” Hussain said.

The tax base is narrow because of the prevalence of different rates of VAT under the VAT Act 1991. As a result, there is scope for discretion by revenue officials and it creates grounds for corruption.

The state becomes a loser as all the indirect tax paid by taxpayers does not make it to the coffer in the end, the WB economist said.

“This also explains the recent resistance from many businesses against the implementation of the new VAT law that aimed at eliminating multiple rates and limiting discretionary power of revenue officials,” he added.

In the face of opposition from many businesses, the government has shelved its plan to implement the much talked-about VAT and SD Act 2012 for two years.

The legislation, which was framed to increase domestic revenue collection by tapping all areas of the economy, bring transparency and accountability in revenue administration and curb evasion, was planned to take effect from this month.

Revenue collection would rise if the commissioners at field offices curb evasion and collect VAT properly, said a senior NBR official.

“There are hundreds of businesses that escape payment of actual amount of VAT because of corruption among a section of revenue officials.”

Subsequently, the official suggested strengthening the VAT intelligence office to curb evasion.

A major chunk of revenue usually comes from large firms in every country, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh.

“For this reason, the LTU was formed -- to closely monitor the big firms.”

The implementation of the new law did not take off because of opposition of small firms, who now pay package VAT, which is essentially a discounted form of VAT, he said.

“These firms will not pay tax easily,” Mansur said, adding that they should be brought under the net gradually by insisting that they keep records of their transactions.

Like Hussain, Mansur also said the dependence on few firms and on a select few sectors to collect a big portion of VAT and SD is not healthy.

The top VAT and tax providers of every sector should be brought under the LTU through periodic surveys by the NBR, he said, citing the establishment of many hotels and resorts in recent years.

The contribution of gas, power, tobacco and mobile operators would be at best 15 percent of GDP, although they account for more than one-third of VAT and SD collected from domestic production in a year, said Towfiqul Islam Khan, a research fellow of the Centre for Policy Dialogue.

“It means that there is untapped potential for revenue mobilisation,” he said, adding that the leakages must be stopped.

Khan suggested reforms, digitisation of the revenue systems and expansion of revenue administration throughout the country to widen the tax base.