Tax dept suggests steps to achieve revenue collection target by 2021

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Nasir A Choudhury, Managing Director & CEO of Green Delta Insurance Company Limited, inaugurating the 37th branch of the company at Shaan Tower (7th Floor), 24/1, Chamelibagh at Shantinagar in the city recently. Senior officials and branch managers of GDI

FE Report
The income tax department has suggested the government to address policy issues including broadening tax base and boundary of withholding tax, review exemptions, reintroduction of turnover and property tax to achieve the revenue vision by 2021.
The government targets to scale up its tax-GDP ratio to 18 per cent by 2021 from existing 8.7 per cent, one of the poor ratios in Asia. To achieve the desired tax-GDP ratio, the revenue collection target will be Tk 5,250 billion against Tk 610 billion in 2009-2010 fiscal.
The tax department proposed those measures recently in a concept paper titled 'Vision 2021: Issues and Prospects of Direct Tax' in a seminar arranged by BCS (taxation) association.
The paper, presented by Aminur Rahman, tax policy head of the National Board of Revenue (NBR), has suggested the government to strengthen checking process of taxpayers identification number (TIN), combating tax evasion and audit of universal self-assessment files to increase direct tax collection.
The present government has attached more priority to raise direct tax collection through different measures. Country has a poor taxpayers' base as only 0.75 million people pay income tax against 150 million population.
"… at the end of year 2020-2021, total direct tax to be collected will be Tk 2,736 billion against Tk 139 billion in 2008-09 which is around 20 times higher," the paper said.
Collection of direct taxes has been growing at a steady rate over the past few years as contribution of direct tax was 23.43 per cent in 2006-07 that rose to 27.5 per cent in 2009-2010, the paper said.
The concept paper has pointed out widespread tax exemptions, narrow tax base, existence of huge underground economy, tax evasion, lack of organisational capacity building as major reasons for slow growth of direct tax collection.
"The total agriculture sector is completely out of tax net where total 23.5 million workforces are engaged. Similarly, income of wage earners is fully exempted from tax. Total number of wage earners is also fully exempted from tax. Total number of wage earners is estimated at around 5.5 million and they remitted around US$ 9.0 billion in 2008-09," it said.
It also stressed the need for taxpayers' education and counselling along with gaining their confidence to make people tax-compliant.
"It is estimated that if present trend of growth rate, 22 per cent, prevails, NBR would be able to raise revenue up to Tk 1,507 billion which is around 55 per cent of the desired revenue," the paper said.
The country will have to scale up number of registered taxpayers to 4.4 million, almost double from the existing nearly-2.24 million, which is an uphill task with existing manpower, it said.
"It would be difficult to meet the challenge of 2020-2021 unless the limited logistics and manpower is enhanced to a reasonable level," the paper said.
Direct tax collection growth showed a sharp increase since 2001-2002. Growth rate was only 8.0 per cent that rose to 18 per cent in 2008-09.
Number of registered taxpayers also increased to about 2.24 million against 88,045 in 1972-73 while tax collection target rose to Tk 139 billion from 0.1036 million, 1338 times higher.