Tuesday, June 25, 2024


Dhaka Tribune

Taxes need to be better not higher

In order to get people to pay their taxes, faith needs to be restored on the system itself

Update : 30 May 2024, 02:35 PM

With Bangladesh’s current inflation rates refusing to budge, the recent announcement of the government potentially reducing source tax on incomes from the supply of essential cooking items is a good step in the direction.

The rate of source tax, also known as Tax Deducted at Source (TDS), falls under the category of indirect taxes which always puts an inordinate amount of financial pressure on low income groups and to say absolutely nothing of the ultra poor. Which is why a potential halving of the TDS on essentials such as rice, wheat, potato, onion, maize, edible oil, salt, and sugar could prove to be some much needed relief for those living around the poverty line.

However, this can only be considered a stop-gap solution at best. The government needs to slowly pivot away from relying on indirect taxes since, due to their unavoidable nature, they only end up hurting the underclass. Taxes as a very idea has always meant that everyone pays in accordance with their means so that the nation can achieve its own economic goals -- which is why the government’s focus should be on improving the state of its revenue collection in a way that aligns with Bangladesh’s medium-term ambitions.

Getting people to pay their income tax has historically been a tricky endeavour, but the reasons behind this predicament is not without justification. The general public views taxation with a lot of hesitation, while the government’s inability to provide any semblance of transparency regarding how a citizen’s hard-earned tax money is being spent has resulted in the erosion of trust from our tax culture.

It is clear that, in order to get people to pay their taxes, faith needs to be restored on the system itself, which in turn would require sweeping changes into our very tax culture itself.
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