Bangladesh's national budget for FY27 lacks a coherent tax justice framework and falls short on progressive taxation, revenue leakage control, and accountable governance, the Centre for Policy Dialogue (CPD) said Thursday.
Tamim Ahmed, senior research associate at CPD, presented these findings at a program titled “Tax Justice in the National Budget: Observations on Fiscal Proposals for FY2026-27” held in the capital.
CPD research director Khondaker Golam Moazzem moderated the event that was organized in partnership with Christian Aid.
The study evaluated the adopted budget against four pillars of tax justice, equitable financing of development, reduced regressivity, elimination of revenue leakage, and accountable governance.
CPD noted that Bangladesh's tax-to-GDP ratio has fallen to the lowest level in South Asia, with the new BNP-led government pledging to raise it to 10% in the medium term and 15% by 2035.
However, the think tank said a revenue-centric approach without structural reform risks deepening inequality.
CPD estimates Bangladesh lost Tk226,236 crore to tax evasion and avoidance in FY23 alone, while actual VAT collection stands at only 28%-29% of its potential.
The presentation flagged that indirect taxes such as VAT and consumption-based levies account for roughly 65%-66% of total NBR revenue, placing a disproportionate burden on lower-income households.
The budget's reliance on VAT as the single largest revenue source at 38% drew particular concern.
While the five-year personal income tax roadmap and the new 35% slab for incomes above Tk35 lakh from FY29 were welcomed as progressive steps, CPD said the current tax-free threshold of Tk3.75 lakh fails to provide adequate inflation-adjusted relief to low-and middle-income taxpayers.
CPD also criticized the budget's silence on introducing an inheritance tax framework and its failure to reduce the standard VAT rate from 15% to a more competitive 10%.
On the third pillar, CPD acknowledged positive measures including automated audit selection, mandatory TIN for bank accounts, central data integration linking NBR with NID, banks, and utilities, and the absence of a tax amnesty scheme.
However, it flagged the absence of a comprehensive tax expenditure report, no clear tariff reform roadmap ahead of LDC graduation, no penalties for non-cooperation with NBR during audits, and continued fossil fuel-based tax incentives for power producers.
The legalization of undisclosed real estate investments was flagged as raising “significant fairness concerns” by potentially rewarding non-compliance.
While praising the separation of revenue policy from administration and the 66 percent increase in NBR's budget allocation, CPD raised accountability concerns.
It noted the absence of nationwide Electronic Fiscal Devices, inadequate attention to digitalization of associated institutions, and the marginal increase in the Competition Commission's allocation.
CPD recommended indexing income tax thresholds annually to inflation, consolidating the eight-slab VAT structure into a simplified three-tier system, introducing a direct wealth tax, mandating e-invoicing for VAT-registered businesses, and institutionalizing a Tax Justice Impact Assessment for every annual budget.
The think tank also urged that the newly created Revenue Policy Division and Revenue Management Division be insulated from political and administrative interference through legal safeguards.
