With one of the lowest tax to GDP ratios in the world, Bangladesh must do all it can to increase its collection and improve its earnings. This is not something that we need to contend with alone, as international agencies have also identified this to be an issue.
Just recently, a delegation from IMF shared observations and recommendations that can help us widely broaden our tax net, a precondition of the $4.7 billion loan program for Bangladesh.
The recommendations mainly focused on eliminating less effective exemptions, broadening the tax base, and increasing revenue collection. For example, the IMF recommended getting rid of the lower tax slab of 5%. There were also calls for mandating companies to submit electronic returns beginning June of this year. In general, such recommendations should increase our tax collections and overall tax income.
Policies that help widen the tax net should definitely be agreed with; Bangladesh depends on that money to fund various development and administrative operations, and historically, we have been severely lacking in this regard. Furthermore, with large numbers of unscrupulous people using loopholes to avoid paying taxes, widening the net should help with that as well.
The authorities would do well to take the recommendations into consideration. Relevant local experts need to be consulted as well, and if the measures are found to be practical, they should be implemented as soon as possible. Additional reformations need to be researched and implemented as necessary.
To reiterate, Bangladesh has one of the lowest tax to GDP ratios in the world. Changes are therefore necessary, immediately.
