Experts question revenue targets, urge structural tax reforms

FE REPORT | Published: June 13, 2026 23:23:59

Economists and business stakeholders have questioned the realism of the government's revenue projections in the proposed FY2026-27 budget, calling for structural tax reforms, improved compliance and greater policy predictability to strengthen fiscal management and support economic recovery.
They also warned that the narrowing gap between revenue earnings and operational expenditure is reducing the government's fiscal space for development spending.
To ensure effective budget implementation, they stressed the need for a stable investment environment, a realistic revenue framework and measures to restore private-sector confidence and long-term growth.
The observations were made at a discussion titled "Budget 2026-27: Expectations and Achievements", organised by the Policy Think & Economic Research Centre (PTERC) at the CMJF Auditorium in the capital's Purana Paltan on Saturday.
Among those attending were former National Board of Revenue (NBR) chairman Dr Muhammad Abdul Mazid, former International Business Forum of Bangladesh (IBFB) vice-president MS Siddiqui, Dhaka University economics professor Muhammad Shahadat Hossain Siddiquee, Economic Reporters' Forum (ERF) president Doulot Akter Mala, and North South University professor AKM Waresul Karim, who is also dean of the School of Business and Economics.
The session was chaired by PTERC Chairman Md Mazadul Hoque.
Dr Mazid said revenue income and operational expenditure had almost reached the same level, leaving limited room to finance development activities from domestic resources.
"Revenue earnings may be sufficient to meet day-to-day government expenses, but the fiscal space for development expenditure is gradually shrinking," he said.
He noted that revenue collection depends heavily on economic performance, while much of government expenditure is unavoidable. Failure to achieve revenue targets would therefore put additional pressure on the overall budget framework.
Expressing concern over the investment climate, Dr Mazid said frequent changes in tax and customs duties were creating uncertainty for investors.
"Without policy stability for at least five years, long-term investment and revenue growth will be adversely affected," he said.
He also recommended separating the NBR's policy-making and implementation functions to improve transparency and accountability.
MS Siddiqui argued that the advance tax system increases businesses' capital costs and ultimately contributes to inflationary pressures.
According to him, higher taxes imposed at the import and production stages inevitably raise the prices of goods in the market. He called for comprehensive reforms to the tax structure to help contain inflation.
Prof Siddiquee described the proposed budget as a "budget of expectations", saying the economy appeared to be on a gradual recovery path.
He said the government's target of bringing inflation down from 9.42 per cent to 7.5 per cent was ambitious but achievable. However, he cautioned that public confidence would remain weak unless tax policy measures translated into visible market outcomes.
He also warned that the country's debt-to-GDP ratio of 41 per cent signalled growing economic risks.
AKM Waresul Karim criticised the proposed 10 per cent tax on stock dividends and retained earnings, describing it as anti-investment.
He argued that stock dividends do not involve any actual cash transaction and merely represent an accounting adjustment. Taxing such dividends, he said, would place an unjustified burden on shareholders.
Mr Karim added that companies already pay taxes on their profits and imposing an additional tax on the same earnings could discourage investment and undermine the business environment.
Doulot Akter Mala questioned the budget's revenue assumptions, saying there was little indication of how the government planned to generate the income needed to meet its expenditure commitments.
"There should be greater compatibility between the government's revenue projections and expenditure plans," she said, stressing the need for a more realistic fiscal framework.
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