NBR moves to boost tax revenue

Increasing direct tax revenue is no doubt the prime concern of the National Board of Revenue (NBR) at the moment. Despite a substantial surge in the number of TIN (Taxpayer Identification Number) holders, the existing state of tax collection reveals a lack of mentionable revenue growth. This discrepancy suggests that a considerable portion of individuals obligated to pay taxes remains outside of the purview of taxation. Consequently, there has been a longstanding imperative to broaden the tax net. Widening the tax net being fundamental to increasing tax revenue, has been a subject of discussion for long, but whatever efforts that were in place did not prove effective enough to cause any desirable change in NBR's revenue collection, so far.

According to a recent report in this newspaper, the NBR has undertaken a strategic move to augment its tax collection network by introducing four specialised wings. These wings are designed to focus on international taxes, automated tax collection and taxpayer services, tax intelligence and investigation, and source-tax management. The report says that a total of 56 tax zones, including 25 new ones, will be restructured to provide services to taxpayers in different phases. Tax officials anticipate a two-fold increase in direct tax collection following the full implementation of these new tax zones. The NBR aims to collect direct taxes amounting to Tk 1.54 trillion in the current fiscal year. In the first phase, 10 new tax zones, along with existing ones, will commence operation. Additionally, units such as tax intelligence and investigation, e-tax management, and source tax (withholding tax) management will become operational in this initial phase. In the second phase, tax zones in Chattogram, Coxes Bazar, Faridpur, Narsingdi, Jashore, Kushtia, Dinajpur, and Noakhali will resume operation. The expansion plan, according to NBR sources, is anticipated to elevate the country's tax-GDP ratio to double digits which will surpass the current 8.0 per cent---one that is lowest in South Asia.

While the expansion plan has definite merit, the key to its success lies in ensuring that no taxes, no matter how small, are overlooked or evaded by TIN holders. Numerous TIN holders engaged in small businesses or earning from diverse sources operate outside of the tax net. Unofficial reports state that approximately 40 million middle-income individuals in the country do not fulfil their tax obligations. While holding wealthy evaders accountable is a primary responsibility of tax authorities, such efforts typically yield minimal impact on overall revenue collection. Thus, a successful strategy for tax mobilisation requires a combination of regular activities and the inclusion of new taxpayers. Reforms aimed at expanding the tax net should be comprehensive and innovative, generating revenue not only in the short term but also sustaining it in the long run. Also, in executing the reforms the authorities should take care to ensure that the revenue mobilisation drive does not earn a bad name for needless harshness that may act as a disincentive for people to return taxes. Smart and well devised campaign in this regard may be found useful.