Doing away with duty concession

A report titled 'Re-strategising the economy and mobilising resources for equitable and sustainable development' prepared by a 12-member taskforce in its revenue revenue-mobilisation part has suggested a long list of measures including zero-rated tariffs. In fact, waiver of duties aimed at arresting escalation of prices on imported commodities including the staples has in the majority cases benefited the bulk importers, not the intended consumers. By the time prices of some of the items this overwhelmingly import-dependent country witnesses to ease, the monopolistic business syndicate has made exorbitant profits to the tune of billions of taka. This ploy proved very effective in case of potato, onion, cooking oil, rice and even egg to fleece the consumers last year, and this year too is no exception. Right now, the nexus of importers and refiners of soybean and palm oils have been resorting to this vicious intrigue.

Lowering duty in the middle of the year through Statutory Regulatory Order (SRO) has also been discouraged unless emergencies like natural disasters arise. Such duty concessions too were purportedly made in the past on political considerations to the benefit of party loyalists or lackeys. If the measures do not come to the relief of the intended beneficiaries by way of significantly scaling down inflation, there is no point making arrangement for the business sharks to feast on the misery of the common people.

What happens as a consequence is that the exchequer loses revenue. This also creates a bad precedent for other business entities down the rank to evade taxes. When they see that the larger corporate houses enjoy duty concessions without sharing the benefit with the consumers, these mid-level and smaller wholesalers or stockists also become a party to the unholy alliance. Transparency in business becomes a casualty on all fronts. This exactly explains why inflation can go through the roof when the market forces are distorted to the advantage of a seller market. There can still be an exception to this wholesale elimination of duty concessions if the measure is conditional to international treaties or for strong humanitarian causes.

The bottom line here is to garner as much revenue as possible without affecting the purchasing power of the common people. Among a host of other suggestions, automation of VAT and tax-return submission looks compulsive. But expansion of the tax net should be the ultimate objective. This recipe has been reiterated time and again but the crucial point is to pinpoint how it can be realised. Constitution of a special wing for analysis of tax policy under the Internal Resource Division can do the trick. Maintaining strong liaison with the Bangladesh Bureau of Statistics, local government bodies and the Local Finance Commission, land offices and trade licensing authorities, the proposed wing can frame tax policies on not only local enterprises but also immovable property such as land and water bodies. In that case, the range and scope of the NBR have to be enhanced in order to identify the tax-evading entities under the policy suggested. Once the taxable individuals, businesses and enterprises across the country are thus identified, they can be brought under the tax net, widening it to the desirable level. Thus the tax-GDP ratio will no longer be one of the lowest in the region and the deficit between national budget and revenue income will narrow down.