Dr Muhammad Abdul Mazid :
Existing ( tax ) revenue regulations in Bangladesh like Income Tax, VAT and Customs laws are usually presumed as colonial (British) by birth, too much intricate in attitude and curiously cumbersome for enforcement. Though Taxation, as an influential instrument for revenue income for the state, was very much there in ancient and medieval India in different form and style but the modern Tax systems as we know it today was first introduced by the British rulers in India . The Indian Mutiny had just exploded in 1857. The British government took over ruling power of India from the East India company. The country was in a bad state financially. James Wilson (1805-1860) was posted in Calcutta as member (finance) in the Viceroy’s council which is equivalent to the finance Minister. James Wilson, after taking over his assignment in India, had introduced a Bill in the Indian Legislature to restructure tariff laws. Not just that, he also introduced the budgetary system and paper currency, he stood out for floating the Income Tax Act in India in his first ever Budget Speech for FY 1860-61. Two months after historic introduction of income tax in India Wilson died in Calcutta from dysentery. So were many who felt that the novelty of the tax and the inquisitorial methods which its administration would require , would go a long way in making the tax a failure.
Wilson witnessed the revenue law laid down by Manu, the sacred authority and the version of the ancient Hindu law and he concluded , proposed, ” Now, Sir, I must say that there is latitude enough for the most needy Exchequer and the most voracious Minister :- a twenty percent income tax upon profits, tax varying from two to five percent , upon accumulated capital, a share of almost every article produced, an annual tax on the trades, half the produce of mines” . Though Wilson took the logic from ancient Indian pundits as basis, he imported British regulatory frame work for the revenue collection mechanism for imposing it to natives of India. The first general income tax was levied for a period of five years in order to meet the difficulties caused by the Mutiny. It was levied, on the English model, on all incomes above Rs 200 per anum and arising from property, professions, trades and offices at the rate of 2 per cent , on income between Rs 200 and 500 per annum, and 3 per cent on larger income which also bore the additional one per cent to be used for purpose of local development. One may note with dismay that the basis for income tax calculation made cumbersome from the start where an embedded scope for creating and applying discretionary power by tax officials leading to harassment and revenue dwindling. In fact the Income Tax laws and methods of collection were framed and formulated by the British political bureaucrats , who themselves were exempted from tax payment and the responsibility of collecting taxes were assigned to another such class of bureaucrats who also got the impression that they will not be liable for paying tax rather they will share commission for collecting more. So the regulation and the method of calculation and collection as well, all were designed only for imposing on the natives. Unfortunately this subjugating philosophy and attitude as a legacy, still reign in a free independent society and state. If the lawmaker is exempted from the enforcement of that particular law and if it is framed only for ruling, regulating, controlling and exacting revenue from others, then one can easily imagine what could it be its nature and level both in spirit and action.
Though the modern income tax was introduced in 1860 , lasted about five years until it was scrapped in the face of protests from citizens. It was re introduced in the seventies and eighties for a short duration. First formal tax law was promulgated in 1882 , compiled in 1886 and finally the Indian Income Tax Law 1922 came into being, which anthologized the entire annual amendments.
The Income Tax Law of 1922 was adopted by India and Pakistan in 1947 and later by Bangladesh in 1972 just by replacing the word ‘India’ by ‘Pakistan’ and ‘Pakistan’ by ‘Bangladesh’ respectively. India introduced its own income tax law in 1961 and Bangladesh introduced in 1984 as an ordinance as there was no parliament in session at that time. it is again a fact that this time the law was written ( rather copied from earlier laws) by local and foreign bureaucrats tuned consultants, not by the lawmakers. After a long demand and decree a new income tax law is now in the making and it is hoped that it will be enacted by the law makers in the parliament . The present customs law was also born in the British India , carried over to Pakistan and present Bangladesh. Though the nature and scope of customs tariff have to be reformed, if not replaced, to the open market economy and global business environment , it is yet to be amended or reformed. The present vat laws are the replacement of age old sales tax. Though new vat laws have been introduced in 1991, it has got the essence of past laws which were framed during colonial rule and are subject to proper amendments, modifications to go at par with industrial and investment business policies.
Re -framing the tax revenue regulations should deserve a very close review of existing rules and regulations one by one, if not word by word in fitting with present day demand of social norms and business practices. If these regulations have to be effectively enforceable, prudently practiced, impartially implemented in a free and democratic environment unlike past colonial regime, it has to be such a public law framed by the lawmakers who should also be within its jurisdiction.
Appropriate ownership has to be established for each item of law equally on every footing. Rules should not be framed only for the ruled, to twist the innocents and ignorant, should not be a tool for applying discretionary power by the enforcement officials , but be applicable for all indiscriminately. Cannons of tax law should be digestible and implement-able across the board and be applied without fear and favor. It has to be simple, comprehendible, non duality in meaning and interpretation, delegable, assertive but with adequate relieving and remedial provisions. Stakeholders views at large should be taken into consideration to make it more user friendly.
(Dr Muhammad Abdul Mazid, former Secretary to Government of Bangladesh and former Chairman, NBR. mazid. [email protected])
