Big segment of population are evading taxes

Recently, the independent think-tank Centre for Policy Dialogue (CPD) revealed the findings of a survey titled 'Potential of Personal Income Tax in Bangladesh: An Examination of Survey Data'. The study found that some 68 per cent income earners, who are capable of paying taxes, are not paying taxes. Carried out earlier this year among 1,200 people with taxable income, the survey found that only 32 per cent had paid income tax in the previous year. Nearly 25 per cent of the survey participants belonged to the affluent class.

The survey also found that 75 per cent of the respondents feel that the tax system inherently favours the elite group and 65 per cent believe that corruption is prevalent in the taxation system. Nearly half of the respondents said that the tax system is overly complex, while calling for incentives to encourage the lower income households to become taxpayers.

According to the National Board of Revenue (NBR), there are nearly 3.50 million registered taxpayers. Less than two million submit returns on regular basis. However, the number of tax return submission is increasing significantly.

It needs to be mentioned here that the tax-GDP (gros domestic product) ratio was only nine percent in fiscal year 2016-17. This is far below the developing country average of 15 per cent of GDP.

Bangladesh's per capita income is almost double than that of Nepal's. Still Nepal has a higher tax-GDP ratio. Bangladesh's tax-GDP ratio is lower than Nepal's by 14 percentage points.

A large number of taxpayers frequently depend on income tax lawyers. In some cases, unscrupulous lawyers advise them about how to evade income tax. This is not desirable for the greater interest of the economy. I hope that this wrong concept among people regarding taxes will diminish. Taxpayers should declare all wealth in their tax returns.

If tax is paid properly by all, then the government will be able to invest more into the infrastructure and implement bigger projects for the welfare of the nation.

Md. Zillur Rahaman

Islami Bank Bangladesh Ltd.

Lalmohan Branch, Bhola.