Fake TINs and tax revenue potentials
Sunday, 21 December 2008
THE National Board of Revenue (NBR), according to a media report, will sit with a number of government agencies, including the Rajdhani Unnayan Kartripakkha (RAJUK), the Bangladesh Road Transport Authority (BRTA), and the commercial banks, soon in a bid to identify the fake tax identification numbers (TINs), if there are any. The NBR has taken the move out of the suspicion that a large number of individuals, enjoying income beyond the tax-exempted limit and having TIN numbers (fake or real), are evading tax. Actually, the action what the NBR is now mulling has been long overdue because the serious mismatch between the number of TIN holders and that of actual taxpayers.
The number of valid TIN holders, according to NBR data, is nearly 22, 63,000. But only 676,100 people submitted their tax returns for the 2008-09 fiscal paying over Tk. 7.91billion in taxes. The NBR-supplied TINS against which the government does not receive any tax are not anyway fake ones. The reality is that such TIN holders, if they have taxable income, are evading tax or, in other words, the NBR has failed to collect tax from them. The matter may be different with some TIN holders who do not have taxable income and had to collect such numbers for some circumstantial need, the NBR should strike off such numbers in the case of its failure to serve notices upon them, in time earlier, to file their returns. However, in addition to NBR-provided TINs, there exists an unspecified number of fake ones. Many tend to believe that the number of fake TINs would several times more than the genuine ones. The fact remains that the NBR people have never been serious about weeding out the fake TINs also. The revenue administration officials, like their counterparts in other government offices, have a long tradition of taking things very casually. The reason for such indifference is not unknown to conscious section of citizens.
A section of the officials and employees in tax offices are, allegedly, involved in the supply of fake as well as genuine TINs against which the government does not receive any revenue. However, the NBR people concerned earn between Tk 1500 and Tk. 2000 for each of the TINs. This has been an open secret. Mostly, these types of TINs are procured for meeting the requirements of banks, BRTA and other government offices that do not have the mechanism to detect their genuineness. It is hard to believe that the NBR even after 37 years of country's independence could not develop a mechanism to supply annual tax payment certificates that cannot be forged or counterfeited. The government offices, instead of TINs, should ask for submission of the latest tax return certificates, as has been demanded by Rajuk this time for application of plots in Uttara and Purbachal in the capital city and its outskirts, with a view to bringing down the number of forgery cases. However, there is no guarantee that this would stop totally the evil practice of faking the tax documents. Yet this could be a good try.
What is the number of potential taxpayers in the country? It is hard to figure out any definite number. It could be 5.0 million or more. Subtracting 40 per cent of the population who are poor without any taxable income, the NBR has to find out the potential taxpayers from amongst the rest 90 million people across the country. Many tend to believe that finding 5.0 million taxpayers among the remaining population would not be that difficult when nearly 20 per cent population belong to the high and middle income categories. If that magic number of potential taxpayers could be somehow brought under the tax net and motivated to pay tax regularly, the revenue earning from income tax would go up by, at least, seven times of what is earned now. Sounds too fanciful? But with a really honest and efficient revenue workforce in place, the NBR can, possibly, hit the target.
The number of valid TIN holders, according to NBR data, is nearly 22, 63,000. But only 676,100 people submitted their tax returns for the 2008-09 fiscal paying over Tk. 7.91billion in taxes. The NBR-supplied TINS against which the government does not receive any tax are not anyway fake ones. The reality is that such TIN holders, if they have taxable income, are evading tax or, in other words, the NBR has failed to collect tax from them. The matter may be different with some TIN holders who do not have taxable income and had to collect such numbers for some circumstantial need, the NBR should strike off such numbers in the case of its failure to serve notices upon them, in time earlier, to file their returns. However, in addition to NBR-provided TINs, there exists an unspecified number of fake ones. Many tend to believe that the number of fake TINs would several times more than the genuine ones. The fact remains that the NBR people have never been serious about weeding out the fake TINs also. The revenue administration officials, like their counterparts in other government offices, have a long tradition of taking things very casually. The reason for such indifference is not unknown to conscious section of citizens.
A section of the officials and employees in tax offices are, allegedly, involved in the supply of fake as well as genuine TINs against which the government does not receive any revenue. However, the NBR people concerned earn between Tk 1500 and Tk. 2000 for each of the TINs. This has been an open secret. Mostly, these types of TINs are procured for meeting the requirements of banks, BRTA and other government offices that do not have the mechanism to detect their genuineness. It is hard to believe that the NBR even after 37 years of country's independence could not develop a mechanism to supply annual tax payment certificates that cannot be forged or counterfeited. The government offices, instead of TINs, should ask for submission of the latest tax return certificates, as has been demanded by Rajuk this time for application of plots in Uttara and Purbachal in the capital city and its outskirts, with a view to bringing down the number of forgery cases. However, there is no guarantee that this would stop totally the evil practice of faking the tax documents. Yet this could be a good try.
What is the number of potential taxpayers in the country? It is hard to figure out any definite number. It could be 5.0 million or more. Subtracting 40 per cent of the population who are poor without any taxable income, the NBR has to find out the potential taxpayers from amongst the rest 90 million people across the country. Many tend to believe that finding 5.0 million taxpayers among the remaining population would not be that difficult when nearly 20 per cent population belong to the high and middle income categories. If that magic number of potential taxpayers could be somehow brought under the tax net and motivated to pay tax regularly, the revenue earning from income tax would go up by, at least, seven times of what is earned now. Sounds too fanciful? But with a really honest and efficient revenue workforce in place, the NBR can, possibly, hit the target.