Income tax: Achievements and priorities
Monday, 25 October 2010
Shamsul Huq Zahid
The National Board of Revenue (NBR), according to a newspaper report, will soon launch a countrywide spot assessment drive with a view to roping in new taxpayers. And the rural areas will also come under the drive.
With the success achieved in the collection of income tax in the fiscal 2009-10, the NBR people are happy, so are the government policymakers. The volume of tax collected and the number of tax returns filed by the taxpayers have surpassed those of any previous year.
More than 1.0 million tax returns were submitted in the just concluded fiscal year despite the fact the government did extend the tax return submission deadline by only one week this time instead of the usual 30 days. However, the number of tax returns includes the petitions filed by taxpayers seeking some more time to submit their returns.
Actually, there should be no valid reason for the NBR men to feel elated by what is being claimed as major achievements. They have, in fact, covered their past failures, marginally. Yet they deserve kudos for making efforts to create awareness among the people about their obligation to pay tax and for producing some positive results, in terms of tax collection.
The tax-GDP ratio in Bangladesh has been dismally poor if seen in the context of its large population. The NBR chairman has pointed out the collection of tax is well below the potential when the average income level of the people has recorded a rise in recent years.
The number of tax returns submitted annually by the taxpayers has hovered between 700,000 and 900,000 until recently in a country which has a population over 160 million. It is assumed that nearly 20 per cent of the population or 32 million belong to the rich and middleclass and, at least, 6.0 million to 8.0 million of them, as for now, are eligible to pay tax in varying amounts.
Since the majority of the rich and the middleclass people live in urban centres, the number of tax returns filed annually does prove that 50 to 70 per cent of the eligible taxpayers living in cities and towns do not pay any tax. More importantly, most of the existing taxpayers do not pay the right amount of tax.
The reasons for large-scale tax evasion are many. Lax tax administration, harassment, reluctance to part with a portion of the income, lack of incentives to taxpayers etc., are oft-cited reasons.
Of late, the NBR has put greater emphasis on programmes to motivate the potential taxpayers. The Tax Fairs, organized recently in Dhaka and Chittagong by the NBR, were aimed at motivating the people to pay tax. The fairs drew a large number of existing and potential taxpayers and most of whom listed harassment by taxmen as a major hurdle to the payment of tax. Many taxpayers, instead of going to the tax offices, took part in long queues at the tax fairs to pay tax. They found the tax payment there relatively hassle-free.
The NBR has created opportunities for individuals to pay tax online. However, the number of tax returns submitted online has not been that significant this time. The Board does need to make the taxpayers, both existing and potential ones, aware of the facility and ensure that the taxpayers using online facilities are not subjected to unnecessary harassment. Otherwise, the very purpose of offering the facility to the taxpayers would be defeated.
One particular issue, incentives to individual taxpayers, bothers the existing as well as potential taxpayers. They have a feeling that the greater part of the money they pay as tax is spent on the maintenance of inefficient government officials, who do not have any sympathy for the common man. Besides, a part of the tax money is also misappropriated by the powerful and influential people. Besides, the taxpayers do not have access to public health facilities that are, in most cases, in a bad shape.
There is no denying that whatever facilities that are being made available by the government are equally enjoyed by both taxpayers and tax evaders. This type of situation acts as a disincentive to the taxpayers. The policymakers should devise ways to offer some kind of incentives to the taxpayers, at least, to those who do deserve support, medical or otherwise. However, no taxpayers would raise any objection to the government's efforts to offering services to the poor on a priority basis.
The success in increasing both the number of taxpayers and the volume of tax in recent years, though not by a big margin, has encouraged the NBR top brass to go for bigger programme. But NBR while doing so should try to rope in the eligible taxpayers living in urban centres, continue with its campaign to make people aware of their obligation to pay tax and get rid of the inefficient and corrupt elements within the tax administration.
The National Board of Revenue (NBR), according to a newspaper report, will soon launch a countrywide spot assessment drive with a view to roping in new taxpayers. And the rural areas will also come under the drive.
With the success achieved in the collection of income tax in the fiscal 2009-10, the NBR people are happy, so are the government policymakers. The volume of tax collected and the number of tax returns filed by the taxpayers have surpassed those of any previous year.
More than 1.0 million tax returns were submitted in the just concluded fiscal year despite the fact the government did extend the tax return submission deadline by only one week this time instead of the usual 30 days. However, the number of tax returns includes the petitions filed by taxpayers seeking some more time to submit their returns.
Actually, there should be no valid reason for the NBR men to feel elated by what is being claimed as major achievements. They have, in fact, covered their past failures, marginally. Yet they deserve kudos for making efforts to create awareness among the people about their obligation to pay tax and for producing some positive results, in terms of tax collection.
The tax-GDP ratio in Bangladesh has been dismally poor if seen in the context of its large population. The NBR chairman has pointed out the collection of tax is well below the potential when the average income level of the people has recorded a rise in recent years.
The number of tax returns submitted annually by the taxpayers has hovered between 700,000 and 900,000 until recently in a country which has a population over 160 million. It is assumed that nearly 20 per cent of the population or 32 million belong to the rich and middleclass and, at least, 6.0 million to 8.0 million of them, as for now, are eligible to pay tax in varying amounts.
Since the majority of the rich and the middleclass people live in urban centres, the number of tax returns filed annually does prove that 50 to 70 per cent of the eligible taxpayers living in cities and towns do not pay any tax. More importantly, most of the existing taxpayers do not pay the right amount of tax.
The reasons for large-scale tax evasion are many. Lax tax administration, harassment, reluctance to part with a portion of the income, lack of incentives to taxpayers etc., are oft-cited reasons.
Of late, the NBR has put greater emphasis on programmes to motivate the potential taxpayers. The Tax Fairs, organized recently in Dhaka and Chittagong by the NBR, were aimed at motivating the people to pay tax. The fairs drew a large number of existing and potential taxpayers and most of whom listed harassment by taxmen as a major hurdle to the payment of tax. Many taxpayers, instead of going to the tax offices, took part in long queues at the tax fairs to pay tax. They found the tax payment there relatively hassle-free.
The NBR has created opportunities for individuals to pay tax online. However, the number of tax returns submitted online has not been that significant this time. The Board does need to make the taxpayers, both existing and potential ones, aware of the facility and ensure that the taxpayers using online facilities are not subjected to unnecessary harassment. Otherwise, the very purpose of offering the facility to the taxpayers would be defeated.
One particular issue, incentives to individual taxpayers, bothers the existing as well as potential taxpayers. They have a feeling that the greater part of the money they pay as tax is spent on the maintenance of inefficient government officials, who do not have any sympathy for the common man. Besides, a part of the tax money is also misappropriated by the powerful and influential people. Besides, the taxpayers do not have access to public health facilities that are, in most cases, in a bad shape.
There is no denying that whatever facilities that are being made available by the government are equally enjoyed by both taxpayers and tax evaders. This type of situation acts as a disincentive to the taxpayers. The policymakers should devise ways to offer some kind of incentives to the taxpayers, at least, to those who do deserve support, medical or otherwise. However, no taxpayers would raise any objection to the government's efforts to offering services to the poor on a priority basis.
The success in increasing both the number of taxpayers and the volume of tax in recent years, though not by a big margin, has encouraged the NBR top brass to go for bigger programme. But NBR while doing so should try to rope in the eligible taxpayers living in urban centres, continue with its campaign to make people aware of their obligation to pay tax and get rid of the inefficient and corrupt elements within the tax administration.