A number of former top officials of the National Board of Revenue (NBR) opined that bringing drastic reforms, including automation in the tax administration, is the only way to achieve revenue target.
They also said major reduction in tax benefits or exemption to bring those at minimum level and cut in tax expenditure would help increase the country's tax-GDP ratio.
They were speaking at a webinar - "Draft Income Tax Act 2023 and Salient Features of Finance Bill 2023-2024" - organised by the Institute of Chartered Accountants of Bangladesh (ICAB) on Thursday.
Speaking at the webinar, former NBR chairman Dr Nasir Uddin Ahmed said automation is the only way to increase revenue income.
He noted that some provisions (in the budget) are rich-friendly, criticising the move to increase the net wealth surcharge to Tk 4,00,000 from Tk 3,00,000.
"Are we trying to make rich people richer through this new rule?"
The NBR former chairman also suggested reducing the tax benefits - extended to garment makers - as it is not sustainable for the government to provide such facilities for long.
"We can't provide exemption facilities to anyone whoever comes to the NBR."
Some changes in the proposed budget and the income tax law were not rational, he added.
NBR former member Farid Uddin said the tax-GDP ratio could be 17-18 per cent, which is now 7-8 per cent.
"To increase the tax-GDP ratio, we need to bring fundamental reforms in the NBR, including automation and integrated tax management."
He said Tk 70-80 billion investment is required to modernise the NBR. Development partners came forward to modernise the entity in 2010-11, but the government did not show interest to do it.
He questioned considering the size of national economy, whether it is difficult or not to invest such an amount to modernise the agency.
The former member said the NBR has been lagging behind achieving its yearly revenue earning targets by at least 25 per cent since 2016. There is potential (of the NBR) to achieve the target, but without automation and reforms, it would not be achieved.
Some good changes have been made (in the new tax law), its ambiguity has been removed, and it has been made easier, but there is no fundamental change.
He added that 2023 has been an unusual year due to the issues like reserve crisis, inflation, and local currency devaluation, and the tax policy should have been taken accordingly.
VAT should not be more than 10 per cent, as 15 per cent VAT is oppressive, he added.
NBR former member Apurba Kanti Das said the NBR should go for automation as soon as possible to get the best result from the new Income Tax Act.
He said if the system is not automated, problems remain; whatever law is formulated.
"There should not be any human touch (automation), and then we can get the best result from the new law."
Mr Das opined that the country's private sector is highly efficient, because its system is automated.
If the NBR takes a massive programme for complete automation, it would be more effective. With the NBR's automation, tax rates could be lower than what these are now.
The government has formulated the income tax law in a way that it has become easily understandable to all, he added.
Speaking at the webinar, ICAB President Md Moniruzzaman said restoring macroeconomic stability, revenue mobilisation, prudent financing of budget deficit, and protecting social sector spending are some of the challenges in the proposed budget.
He said tax-net expansion is essential to improve the tax-GDP ratio.
Implementation of the Document Verification System (DVS) is a milestone initiative of the ICAB and NBR that would change the country's financial ecosystem.
However, Mohammed Humayun Kabir, chairman of the ICAB taxation and corporate law committee, said several changes - brought in the draft Income Tax Law 2023 - are likely to hinder local and foreign investments.
"These will create a burden on businesses, hindering investments," he added.
M B M Lutful Hadee, ICAB Vice President; Snehasish Barua, Partner of Snehasish Mahmud & Co Chartered Accountants; and Rakesh Saha, Partner - Ernst & Young Advisory Services Bangladesh Limited; presented three papers on detailed features of the Income Tax Act and Finance Bill.
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