In order to encourage citizens to pay taxes, income tax receipts will show in which sectors tax money is being spent in the future, said prime minister's finance and planning adviser Rashed Al Mahmud Titumir.
He also said that taxpayers will be interested in paying taxes spontaneously only when they understand what kind of services the state is providing them in return for their taxes.
He said these while speaking as the chief guest at a pre-budget roundtable discussion held at CA Bhaban in Karwan Bazar in the capital on Thursday (May 7).
The Institute of Chartered Accountants of Bangladesh (ICAB) and The Financial Express jointly organized the discussion.
Titumir said that there is a plan to introduce a system from the next budget, where the receipt given to the taxpayer will mention how much of his tax paid has been spent on education, health and social security sectors.
He said that tax evasion and tax fraud cannot be reduced unless a relationship of social trust is established between the state and the citizens.
Blaming the culture of political patronage behind tax evasion and fraud in the country, he said: “Special privileges have been given in various fields, including the tax sector, to keep the ruling class in power. This is where the root of tax evasion and fraud lies.”
Stating that the country’s current tax-GDP ratio is only 6.67%, he said that this is one of the lowest rates in the world. Despite various demands for development, the foundation of the tax system still remains weak.
Highlighting the two types of reforms in the tax system, ‘linkage’ and ‘dislinkage’, Dr. Titumir said that ‘dislinkage’ means reducing personal contact between the taxpayer and the tax officer, while ‘linkage’ means informing the taxpayer where his tax money is being spent.
He also said that the government does not want to walk the path of increasing tax rates. Rather, it wants to increase domestic resource extraction by expanding the scope of the economy. According to him, the most effective way to increase direct taxes is to increase employment.
Stressing the independence of Bangladesh Bank, Titumir said that effective coordination between fiscal policy and monetary policy is essential. He also said that Bangladesh Bank is working on refinancing schemes and special loan programs to reopen closed industries.
BTMA President Shawkat Aziz Russell demanded that the government ensure transparency and accountability in the expenditure of tax money.
“What do you do with my tax money? Just as you arrest me and collect tax, there should also be accountability for where and how the tax money is being spent.”
Russell said that the country's industrial sector is currently going through a difficult time. Many industries are closing down and the government is not able to ensure the necessary environment for business.
"Former Finance Minister Saifur Rahman provided policy support for industrialization. Are we on that path now? I don't think so. Policy reforms are not being done, businesses are collapsing."
He also proposed forming a separate cell to monitor the use of tax money. Expressing concern over the government's income-expenditure balance, he said, "The government's spending tendency is higher than its income. We have to come out of this tendency."
The BTMA president called for a clear disclosure of the percentage of allocations for the industry, education and health sectors in the next budget.
