Tax avoidance or evasion, whatever one may call or term it in the Bangladesh context, still remains a headache for the administration. Only 1.1 million people in Bangladesh, out of its estimated total of 160 million, pay tax to the government against their annual income. The incumbent finance minister often cites this fact with deep frustration ringing in his voice. He is not the only one to refer to the poor number of taxpayers. His predecessors also had demonstrated identical displeasure at this very low level of poor coverage under the income tax net. Admittedly, the income tax-related revenue earning, in absolute figures, has otherwise increased in recent years. But most part of it has come from the businesses and that too, mostly the existing tax-paying entities. However, the growth of revenue from individual taxpayers has remained well below the expected level.
Against this backdrop, the members of two relevant parliamentary standing committees at a pre-budget discussion with the finance minister last Sunday suggested for expansion of the tax net up to the rural areas to help collect tax revenue from the well-off rural residents. The finance minister readily agreed, saying that more tax offices would be set up at the upazila (sub-district) level. Since the rural economy has become stronger than before, many people, he admitted, have the capacity to pay tax. Undeniably, the tax authorities should have their network expanded to the areas where potential taxpayers reside. It is most unlikely that rural people having taxable income would voluntarily travel to nearby urban centres to pay taxes.
The availability of physical facilities is thus undeniably important. But in the case of tax revenue collection, what matters most is the willingness of the people to pay tax in right amount to the government. The location of tax offices at nearby places is however not the only factor for encouraging such willingness. Had it been so, then the country's existing urban tax offices would have been flooded with tax-payers' money. Certain conditions other than more location of tax offices merit consideration in order to help create the much-needed 'willingness' among the potential taxpayers. If a taxpayer finds the process of tax payment cumbersome, he or she would feel discouraged to paying taxes. The abuse or wastage of tax revenue is yet another factor that has a reason to dishearten any taxpayer, actual or potential. Moreover, a taxpayer does like to see some tangible personal benefits, in both near-and long-terms.
Equally important is the efficiency level of the tax officials, particularly those operating at the field level. In this context, mere establishment of tax offices is unlikely to produce the desired results. There have been enough talks about reforming the tax administration. The reform is officially on but it has actually been progressing at a snail's pace, allegedly, due to resistance coming from vested interests within the tax administration. So, what is needed most is the reform of the tax administration in the right direction along with resolute political will of the government.
Extending tax network to upazila level
FE Team | Published: May 15, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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