Improving tax collection
Emdadul Haque | Thursday, 12 March 2009
A government needs resources to take up various projects and programmes in the social and developmental sectors. The resources in large measures are supposed to be mobilised as taxes given by people and organisations. But as everyone concerned probably knows it in Bangladesh, the taxes collected by the government in different areas are pitiably low compared to the potential.
Citizens, of course, have points to raise about government not spending their tax money as efficiently as it should or the hardships it may create on sections of people from the move to extend the net for taxation. Nonetheless, the fact remains that the base of taxation in this country remains rather narrow and planned moves for its enlargement is very important and would be justified to augment tax collection. More significantly, the augmentation requires revamping, modernisation and reforms of the tax administration.
Plans should be on the drawing board and their execution needs to be early to modernise the entire tax administration. The expected upgrading of the taxation machinery and the contemplated actions to expand the taxation base, are yet not seen though these measures would be vital for the government to maintain the high level of its desired spending in various social and developmental programmes.
Before engaging in any reforms in taxation, it appears very necessary that people or institutions should be made aware of the need to pay taxes. There are many people and businesses in the country that are able to pay taxes but do not pay or pay in proportion as they feel no guilt associated with non-payment or insufficient payment of taxes. Furthermore, the present system has deliberately kept many gaps to facilitate tax evasion. The culture is rather ascendant that tax evasion is the smarter or appropriate thing to do than its opposite.
Thus, a truly informative and persuasive campaign ought to precede any move to impose new taxes or purposefully increase the number of new taxpayers. People must be convinced first of the merit of paying taxes and they would also require some assurance that their tax money would be well spent. Only then can their motivation to pay taxes rise.
The efficiency of the taxation machinery depends considerably on their retraining on modern lines. They can be trained in countries where the tax administrations are efficient. But there should also be recognition that without a substantial follow-up, revamping of organisations, procedures and methods of administration, much of the training would be wasted. Especially, the tax administration needs to acquire real capacity in the intelligence and enforcement areas. No one had probably been properly punished in Bangladesh for gross violation of tax laws. This alone shows how important it is to gear up fraud investigation capacities in taxation.
Citizens, of course, have points to raise about government not spending their tax money as efficiently as it should or the hardships it may create on sections of people from the move to extend the net for taxation. Nonetheless, the fact remains that the base of taxation in this country remains rather narrow and planned moves for its enlargement is very important and would be justified to augment tax collection. More significantly, the augmentation requires revamping, modernisation and reforms of the tax administration.
Plans should be on the drawing board and their execution needs to be early to modernise the entire tax administration. The expected upgrading of the taxation machinery and the contemplated actions to expand the taxation base, are yet not seen though these measures would be vital for the government to maintain the high level of its desired spending in various social and developmental programmes.
Before engaging in any reforms in taxation, it appears very necessary that people or institutions should be made aware of the need to pay taxes. There are many people and businesses in the country that are able to pay taxes but do not pay or pay in proportion as they feel no guilt associated with non-payment or insufficient payment of taxes. Furthermore, the present system has deliberately kept many gaps to facilitate tax evasion. The culture is rather ascendant that tax evasion is the smarter or appropriate thing to do than its opposite.
Thus, a truly informative and persuasive campaign ought to precede any move to impose new taxes or purposefully increase the number of new taxpayers. People must be convinced first of the merit of paying taxes and they would also require some assurance that their tax money would be well spent. Only then can their motivation to pay taxes rise.
The efficiency of the taxation machinery depends considerably on their retraining on modern lines. They can be trained in countries where the tax administrations are efficient. But there should also be recognition that without a substantial follow-up, revamping of organisations, procedures and methods of administration, much of the training would be wasted. Especially, the tax administration needs to acquire real capacity in the intelligence and enforcement areas. No one had probably been properly punished in Bangladesh for gross violation of tax laws. This alone shows how important it is to gear up fraud investigation capacities in taxation.