Economists have recommended considering the hardship of the consumers while formulating the national budget as they see it protects only the interest of the producers.
They put forward the suggestion at a pre-budget meeting of the National Board of Revenue (NBR) that began yesterday with the leading economists and economic associations of the country.
“The core task of the government is to protect the interest of both producers and consumers. The NBR sits with different associations before formulation of the budget. But consumers do not have any association so they can speak up their thoughts,” Policy Research Institute (PRI) Chairman Zaidi Sattar said.
“So, the NBR should rationalise the tariff measures in association with both parties by taking a balanced position between consumers and producers.”
Noted economist Professor Wahiduddin Mahmood took part in the discussion as chief guest while the Federation of Bangladesh Chambers of Commerce and Industry President Abdul Matlub Ahmad as special guest, with NBR Chairman Md Nojibur Rahman presiding.
Dr Sattar suggested the tax officials to understand the linkage between the trade tax system and trade policy while taking the economic decisions.
Bangladesh Institute of Development Studies (BIDS) Senior Research Fellow Dr Nazneen Ahmed said the revenue authorities have to play pro-active role in popularising the tax payment system by informing people why they should pay tax and what are its benefits.
Representing Economic Research Group (ERG), East West University Professor A.K. Enamul Haque recommended taking a time-bound plan to bring at least six million taxpayers into the tax net from the existing 1.1 million taxpayers as the economy have that potential.
He also asked the taxmen to look at providing protection to saving tools of taxpayers, bringing young entrepreneurs who work online under tax net, protect taxpayers identity and info as confidential and providing incentives to new sectors who comes into the tax net to encourage them.
BIDS Senior Research Fellow Dr Mohammad Yunus suggested the NBR to do its work based on info and research which needs to be done on fundamental tax issues.
Blaming lack of punishment for tax evasion and high compliance cost for tax payment for tax evasion situation in the country, he suggested the revenue authorities to do research on why the tax collection remains low from the major sectors before going to next step of tax issues.
Quoting a research, managing partner of PricewaterhouseCoopers (PwC) Bangladesh Mamun Rashid said around 12.5 million people in Bangladesh earn more than US$6,000 annually. According to a BIDS survey, around 30 million people earns US$3,500 annually.
“But, why only 1.1 million people are paying tax despite having huge income,” he questioned, adding that the NBR should do more deep analysis to identify the untapped sectors and potential taxpayers.
Seeking suggestions from economists to implement the new Value Added Tax act, NBR Member Barrister Jahangir Hossain said new VAT law will bring every economic activity into net which will help expand the tax base.
FBCCI President Abdul Matlub Ahmad recommended the NBR to consider how the small business and taxpayers could be brought into the tax net.
Due to the widespread tax evasion in the country, tax officials have to start with suspicions that taxpayers are dishonest, said Professor Wahiduddin Mahmood. He suggested the NBR to be very careful about the honest taxpayers.
“If NBR cannot find any anomaly by a taxpayer for continuous five years, they should be given with tax certificates as honest taxpayers,” he said.
In regards to implementation of new VAT law and complete automated system, he said the NBR should be very careful by keeping balance between reality and the ideal practices.
The NBR is going to implement new Value-Added Tax and Supplementary Duty Act-2012 which will have no provisions for package VAT or truncated value-based VAT system and thus, all level of business have to pay a unique and a single VAT rate at 15%.
“The NBR should analyze whether the sudden shift can be a possible move or be logical or not,” he said, fearing that if the NBR wants to go into ideal VAT system, it may lose the package VAT and can get nothing.
The economist suggested NBR to take support from a think tank or Bangladesh Tariff Commission for doing year long research on tax related issues so that it can take a good decision while responding to demands from business community.