It wouldn't be unfair to point out that the current budget is at best cautious if not conservative in its attempts to do the bare minimum to redress the continuing inflation that has bedeviled Bangladesh for far too long now.
Our biggest concern is that while the budget ostensibly prioritizes reducing inflation by increasing tax revenue, once again it is emphasizing regressive revenue streams such as VAT to prop up our revenue collection.
As has been demonstrated time and again, focusing too much on indirect taxes ultimately ends up hurting the economically-vulnerable due to their unavoidable and static nature.
Yes, Bangladesh’s growth over the decades has been a remarkable achievement given just how abject our economy was post-independence, but the country is still host to an inordinate wealth gap with the underclass reeling disproportionately from ever-increasing prices of essential goods and services.
Higher indirect taxes, then, is surely not the best way to increase our revenue collection.
We understand why the exchequer has once again gone to the indirect taxation well. It is because they are easier to levy and collect and we have failed abjectly in levying and collecting anywhere close to sufficient direct income taxes. But if we are ever to make real headway, then we need to figure out how to bring more taxpayers under the tax net and ensure everyone pays their fair share.
Furthermore, while indirect taxes absolutely form an important basis of the economy, it is necessary that a level playing field be established first. For instance, too many businesses simply evade VAT payment, which is completely unfair to businesses which stick to their due diligence and report the VAT they collect.
Our revenue collection will remain virtually stagnant until and unless our entire tax infrastructure is reformed in a way that restores the general public’s lost faith in the very idea of paying taxes.
A wider tax net and enabling our manufacturing industries to facilitate a more diverse export basket should be the order of the day for the government if it wants to increase revenue.
