Kazi Zahidul Hasan :
The country faces formidable challenges to establish an efficient and fair tax system due to lack of administrative and policy reforms and corruption in the National Board of Revenue (NBR), experts said on Monday.
They said, the tax policy should be broad-based and simple. Besides, a transparent administrative procedure should be enforced to achieve the optimal level of the government’s revenue collection.
In Bangladesh, the rich and wealthy people are paying more taxes as the tax administration is yet to exploit personal income and property taxes from other segment of people.
“The revenue administration should be made taxpayers friendly. Reforms should be brought in both the system and administration to make it happen,” Dr Zahid Hussain, Lead Economist, World Bank Bangladesh Mission Office, told The New Nation on Monday.
He added, there are allegations that a section of tax officials unnecessarily harasses taxpayers to extort money discouraging potential taxpayers in paying tax.
“Taxpayers are harassed by the tax officials due to the existing complex procedure in tax payment system. The system should be changed by introducing automation in the NBR,” he said, adding, “Simplicity in tax payment is a must to prevent taxpayers’ harassment and plug loopholes”.
Dr Zahid Hussain said that automation would stop people to people contract in the taxpayment preventing underhand deals between the taxmen and taxpayers.
“Bangladesh’s tax-GDP ratio is 9.5 per cent which is low compared to other countries in South Asia. This is mainly because of tax evasion and existing loopholes in the system. Many tax related dispute are being settled through underhand deals creating leakage in national exchequer,” he noted.
The WB’s Lead Economist also said that creating an efficient tax administration is difficult without an enabling environment within the tax administration, efficient, honest and well-trained tax officials. “The country’s tax administration is lacking all these areas at present,” he added.
He said that there are also honest officials in NBR. But they are failing to perform accordingly due to lack of enabling environment. Dr Zahid Hussain said, “There is urgent need in tax policy reforms to the areas of income tax and VAT collection. A uniform policy should be applied in VAT collection and bonded warehouse facility. Besides, the threshold of income for the individuals and corporate tax could be revised. Indiscriminate tax-holiday and provision of whitening black money should also be stopped to introduce a fair tax system.”
“All these measures could enhance the government revenue collection and prevent tax evasion,” he added.
He said, garment exporters are enjoying various state facilities, they should come under rational tax net. Currently, they are paying 0.3 per cent advance income tax on their exports. It should be raised to maximize government’s revenue collection.
He said, time is yet to come to bring the farm sector in the tax net. At the moment, NBR’s cost of tax collection will be higher than what it could mobilise.
“Corruption in the revenue administration is blocking development of a fair tax system. Even the high officials of NBR are engaged in corruption,” Dr Iftekharuzzman, Executive Director of Transparency International Bangladesh (TIB) told The New Nation.
He said, harassing of taxpayers is not only discouraging the honest taxpayers but also keeping a large section of taxable population out of the tax net.
“Corruption in the revenue administration is nothing but the absence of good governance in government machinery,” he noted.
