The National Board of Revenue (NBR) has been an easy object of criticism for its failure to rope in even a mention-worthy fraction of potential taxpayers. Experts apart, government policymakers are also found to be deeply frustrated by the taxmen's failure in raising the number of taxpayers.Â
Undeniably, the income tax revenue has been rising steadily for quite a long period and it is now almost equivalent to the NBR's earning from the value added tax (VAT). But the increase is attributed mainly to rise in the income level of taxpayers, particularly of salaried employees in the private sector and the corporate profit growth.Â
Currently, only 1.0 million individuals of a country of 160 million, reportedly, submit their annual tax returns. This poor coverage makes Bangladesh a country with one of the lowest tax-GDP (gross domestic product) ratios in the world.Â
It is not that the NBR is not trying to raise the number of taxpayers. It has been making some efforts on its own and also coming under pressure from the relevant decision makers to this effect. But the outcome so far has not been worth recognising. Â
The taxmen are seen confining their efforts mainly to visits to easy and visible targets that include a few private offices and large shopping malls and markets.Â
There are many other potential sources that might help them increase the number of taxpayers significantly.Â
Banks, according to a report published in the Financial Express early this week, could be very effective sources of information for netting potential taxpayers in large numbers.Â
The number of bank deposit accounts does clearly show that the number of taxpayers should also be several times more than the existing one. The number of deposit accounts with the country's banks is 75 million as against that of 1.0 million taxpayers submitting tax returns annually.Â
It is obvious that many people own multiple bank accounts. Assuming that each of the bank clients has, on an average, three accounts with more than one bank, the number of individual bank depositors stands at 25 million. The banks deducted nearly Tk.63 billion as withholding tax in the fiscal year 2014-15. Going by the past trend, the tax revenue on this account is supposed to be bigger in the outgoing fiscal. But there could be deviation because of the cut in interest rates on deposits of all types.
So, it does not need one to be a rocket scientist to assume that a substantial number of bank account holders are potential taxpayers. However, taxmen cannot force any individual to be taxpayer or levy tax on individual's income on the basis of their assumption. The relevant laws would not allow that. Â
If they are, however, serious about locating potential taxpayers they have to have access to the information available with the country's commercial banks. Â Centrally, the Bangladesh Bank has got all the necessary information about the bank depositors.Â
The taxmen are reportedly authorised under the Income Tax Ordinance of 1984 to seek any information from any bank. However, they have to seek such information in writing from the bank's concerned. There are also penal provisions if any bank refuses to make available the same to them.Â
However, there exists opposing opinions on the issue of scrutiny of deposit accounts with banks. Some are in favour of scrutiny but some others against it. The taxmen are also not keen on the issue. Banks, for obvious reasons, dislike the idea of any scrutiny of the accounts of their clients either for increasing the number of taxpayers or for detecting tax evasion.Â
But if the taxmen desire so, they can do that without seeking support of the banks concerned. What they would need to do is to ensure that all bank accounts -- both deposit and loan accounts -- are opened under taxpayers identification numbers (TINs). Those having income below tax threshold, in that case, will have to be exempted from furnishing TINs.Â
If TINs are made mandatory for opening any account, taxmen would be able to make use of the technology to trace the taxpayers' bank details just by entering their TINs and find out whether all the bank accounts have been disclosed in the tax returns or not. Â Indian tax authorities have lately developed various technological tools to enter bank accounts and detect tax evasion.Â
However, for Bangladesh tax authorities it is important to raise the number of productive taxpayers while trying to check tax evasion or tax avoidance, what one may prefer to call it, Â by the existing taxpayers. If the submission of TIN is made mandatory for opening bank accounts by individuals who are bound to submit tax returns in accordance with the Section 74 of the Income Tax Ordinance, the number of registered taxpayers would surely increase. Once NBR people acquire befitting technological tools to visit taxpayers' accounts, the revenue too would go up, automatically.Â
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