The National Board of Revenue (NBR) moves to make a roadmap for raising the country's tax-GDP ratio by 4.0 per cent in the next four years at government's directive.
Officials said the revenue agency made the move following a directive that came from Finance Minister AMA Muhith last Wednesday.
The government assumes that the present one is one of the poor ratios in South Asia, and hence planned the drive to augment the volume of taxes.
In a letter, the finance minister instructed the NBR to prepare the roadmap in a month's time.
He also desires to discuss the issue with the board next month, before getting down to implementing the tax blueprint.
The country has witnessed a slow growth of tax receipt in proportion to GDP since 2008.
The ratio grew only 1.4 per cent in the 2008-2014 period, according to data available with the Ministry of Finance (MoF).
Total tax receipt vis-à-vis the figure of national gross domestic product (GDP) is defined as tax-GDP ratio.
Currently, the country's tax-GDP ratio is 10 per cent that the government intends to increase by four to five per cent in four years through an aggressive drive.
To execute the plan, the finance minister instructed the NBR to prepare a detailed roadmap with possible ways how to make it.
In the letter, the finance minister said income tax and corporate tax would be the major sources of tax receipt. Supplementary duty comes next. Customs duty would be the third source.
He sought a detailed report on tax collection from different sources in line with the ideas given.
Following the directive, the NBR held a board meeting last week to discuss the work plan with the top tax officials for preparing the roadmap. NBR chief Ghulam Hussain presided.
The meeting decided that three members of the NBR from its three wings--Md Farid Uddin of customs, Dr Mahbubur Rahman of income tax and Md Feroz Shah Alam of VAT wing--would prepare a draft roadmap in 15 days.
"Two taxmen placed five-point proposals at the meeting that would be seriously considered in the roadmap," said one official.
There are some 10 million trade licence-holders in the country, according to the data of the Bangladesh Bureau of Statistics, (BBS) who are running businesses.
The number of income taxpayers is only 1.1 million.
Taxmen laid emphasis on tapping the potential taxpayers from the sectors.
They said all trade licence-holders could be asked to submit tax returns. Taxmen can use the database of City Corporations for this purpose.
At the meeting, the NBR chairman projected that the size of the national budget could be Tk 3.0 trillion in 2018. And it presupposes an increase in the tax-GDP ratio by 4.0 per cent by then.
The NBR identified few reasons for low tax-GDP ratio, including change in definition and area of GDP in the last few years. Many of the new sectors, including household works, have been added to the GDP during that time.
Hence, the NBR has to raise the tax-GDP ratio by one per cent a year to reach 14 per cent by 2018, said a source who attended the meeting.
"The government will focus on direct tax collection as import duty has been on the decline with the trade liberalisation policy," he said.
He said the meeting discussed continued pressure of the business community to cut Value-Added Tax (VAT) rate down from the existing 15 per cent.
The NBR meeting focused on horizontal expansion of tax net instead of existing vertical expansion. In a recent tax survey, the NBR found some 172,000 house properties that are yet to be hooked onto the tax net.
"Many of the flat owners are members of housing societies in their respective apartments and they are avoiding legal ownership of flats to avoid payment of taxes," the source said.
The NBR official also pledged to combat harassment in tax offices and resolve manpower shortages in the offices.
At the meeting, the tax officials also explored the possibilities of recruiting college and university students to collect income tax-related data from fields.
Tax education also was focused as a priority task to encourage voluntary compliance.
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