Al Amin :
Economist and businesses claimed that there are lots of scopes to increase the country’s existing tax-GDP ratio, despite the current tax exemption in different sectors to facilitate industrialisation.
Bangladesh has one of the lowest tax-GDP ratios in South Asia and ranks 165 out of 183 countries in terms of tax-GDP ratio.
High tax rate, audit harassment, corruption, mismanagement, administrative weakness and policy complexities are the major reasons behind the low tax-GDP ratio in the country, the economists said.
Besides, the National Board of Revenue (NBR) is failing to increase tax net, although there are many people have taxable income but they don’t pay tax. It is also another reason behind low tax ratio, they added.
According to the Centre for Policy Dialogue (CPD) study, around 67 per cent people don’t pay tax, despite having taxable income.
The NBR projected that the tax-GDP ratio was 9.9 per cent in the fiscal year 2019-20, but it would have been 17.81 per cent had the government not provided tax exemptions.
The government provided tax exemptions of around Tk 2.5 lakh crore to facilitate growth in different sectors in the fiscal year, it said.Of the total exemptions, Tk 46,755 crore was exempted for importing raw materials, capital machinery, and other goods while Tk 1,51,738 crore was waived against bond facilities for export-oriented industries.
Besides, VAT and income tax exemptions amounted to about Tk 50,000 crore, found a recent NBR survey conducted to find out how much tax is exempted each year.
Following this situation, NBR Chairman Abu Hena Rahmatul Muneem on Sunday said that there is no reason to be worried about taxes even though it is low.
The tax-GDP ratio would have been above 17 per cent if tariff and tax benefits not given to facilitate industrialisation, he added.
“Taxes in Bhutan, the Maldives, and Nepal come from tourism, but our taxes come from the industries. In this case, we have to consider many things,” the NBR chairman said.
Abul Kasem Khan, Chairperson of the Business Initiative Leading Development (BUILD) pointed out the very low number of taxpayers in the country and wondered how the tax-GDP ratio will go up.
“The tax net is very limited as very few people contribute to the total revenue of the country,” he told The New Nation on Monday.
If two crore people pay taxes, the tax-GDP ratio will be 10 times higher than that at present. However, only 24 lakh people pay taxes despite 61 lakh people having taxpayers’ identification numbers (TINs), he said.
“High tax rate and audit harassment are discouraging people to pay tax. So, the NBR must introduce citizen-friendly tax system to increase the tax net,” he added.
Meanwhile, Dr Zahid Hossain, former lead economist of the World Bank Dhaka Office, said tax exemption is one of the reasons for low tax-GDP ratio.
Besides, corruption, administrative weakness and policy complexity are also the reasons for it, he added.
