One of the bigger challenges faced by the government has been the collection of revenue from domestic sources -- from a stagnant tax net to obtuse policies, there are far too many hurdles in place for Bangladesh to make any meaningful headway on this front.
While the government’s recent announcement of significantly boosting revenue collection is on the right track with its emphasis on a digital makeover, what is perhaps more important is its purported policy overhaul. According to recent reports, the government aims to increase revenue collection through a three-pronged approach, with the core philosophy of making tax payments easy and, above all, transparent.
Yes, we have known for a long time now that the biggest impediment to our tax net being as wide as it can be is a severe lack of faith on the very tax infrastructure itself, which in turn is the result of a genuine lack of fiscal transparency on the part of the government in how a citizen’s hard-earned tax money is being used. This opaqueness, coupled with the administration’s historic over-reliance on indirect taxes, has resulted in fewer people filing their taxes while also unfairly burdening the impoverished to prop up state coffers.
Even though the announced policy shake-ups still worryingly rely on indirect taxes such as value-added tax, the inclusion of a new Income Tax Act, if formulated properly, aims to make the very act of paying taxes that much simpler -- this alone can genuinely help our tax net grow to a meaningful capacity.
In the past, we have witnessed the National Board of Revenue being far too ambitious and setting targets that are entirely divorced from reality all but ensuring failure -- any revenue targets set by the NBR needs to be cognizant of Bangladesh’s current economic realities.
Revenue collection has never been an easy endeavour in Bangladesh, to that end the jury is still out on this three-pronged approach.
