Tuesday, May 28, 2024

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Dhaka Tribune

Taxes can help with our debt situation

Taxes are an incredibly vital component of a healthy economy

Update : 08 Apr 2024, 10:09 AM

It is incredibly concerning to know that the government's dependence on borrowing has risen primarily due to a massive discrepancy between its income and expenditure, at least according to the Centre for Policy Dialogue (CPD).

In this case, “income” here refers to revenue collection, and given that a narrow tax net has historically been a hurdle that administrations past and present have not been able to overcome, this imbalance makes all the more sense.

It is an unfortunate reality that the overwhelming majority of Bangladeshis view the very concept of taxation as being unjust as taxes are an incredibly vital component of a healthy economy. However, there is more than enough justification behind the general public’s mistrust of our tax culture -- from friction regarding the actual process of filing taxes to the overarching problem of the government’s continued failures in ensuring fiscal transparency, all of these problems have ensured our tax net remaining in a state of arrested development.

According to CPD -- which recently organized a discussion with The Asia Foundation on the state of the nation’s debt and borrowing circumstances -- the government needs to do everything it can to enhance domestic resource mobilization through taxation, emphasizing that it needs to raise direct taxes as opposed to indirect taxes (such as VAT), while also reviewing tax expenditures and incentives.

What we need, essentially, is a zero-tolerance policy on tax evasion, especially on wealthy individuals and businesses who seemingly get away with evading taxes with impunity.

Of course, for the government to widen our tax net in any meaningful way, it needs to make the public feel okay with paying taxes, which means focusing on improving the dire state of fiscal transparency in Bangladesh.

When people know that their hard earned money is being spent by the government to improve not just their own lives but the nation overall it provides the general public with a genuine incentive to pay their taxes.
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