NBR has better options
Tuesday, 2 October 2007
The government from time to time puts in place some beyond-the-usual means to mop up additional resources. The frequency of application of these methods does depend largely on the government's own resource position to meet recurrent as well as development expenditures. Since 1975, the past governments offered the opportunity on a number of occasions to whiten so-called black money by paying a nominal amount of tax. The immediate past political government also extended similar facility during its tenure, whipping up a torrent of criticism by a section of economists, left-leaning politicians and chamber bodies. They argued that the opportunity to whiten black money -- the size of which is believed to be nearly 50 to 60 of that of the formal economy -- against the payment of tax at a rate much lower than one paid by genuine taxpayers, was unfair and discriminatory.
Actually, the decline in revenue collection from one of the major sources -- customs duty -- in view of continuous process of trade liberalisation and existence of a very poor, aggregate number of taxpayers compelled the government to choose a few unusual means to beef up revenue collection. The present interim administration rather applied a better formula to help mobilise tax revenues in addition to that collected through normal process. The National Board of Revenue(NBR), in keeping with the clean image of the interim government, offered in June last the people an opportunity to legalise their undisclosed income -- made through lawful means -- by paying 5.0 per cent penal charge, in addition to the normal rate of tax in a particular year. The time was first set for taking the opportunity to legalise such undisclosed income by July 31 last and it was later extended for another two months at the request from different quarters, including the chamber bodies.
The NBR chairman at the end of the extended period last Sunday expressed his dissatisfaction over the final outcome of the opportunity that was given for legalisation of undisclosed money. According to a report published in this daily Monday, a total of 32, 585 persons paid Tk 6.87 billion in taxes against their undisclosed income of Tk. 37.75 billion. He maintained that the owners of large undisclosed funds, which would run into billions, had been non-responsive to the opportunity. The people belonging to the middle-income group responded very positively to the offer. There could be two major reasons -- the fear factor and the tax rate -- that have discouraged many people from exploiting the opportunity to their advantage. The owners of large undisclosed yet lawfully earned funds might not have taken the risk of being exposed to scrutiny later by the agencies concerned since it often turns out to be fairly difficult to present documents even in support of money earned through legal means. Besides, some people found the tax rate imposed on undisclosed income was high and unfair compared to the rate offered earlier under the opportunity to whiten black money.
The NBR, instead of spending its valuable time on offering such opportunities, needs to concentrate more on the routine tax collection by encouraging an increased number of people to pay taxes and that too in correct amount. The scope for raising tax revenue to a large extent is there, particularly when only about 1.0 million people of a country of 150 million are registered tax payers. What is needed on the part of the NBR is the application of honest and sincere efforts to bring in more people under the tax net and encourage people to deposit the correct amount of tax at the end of a tax-year. Besides, the taxpayers feel encouraged to pay their taxes when they find that their money is being spent for the right cause and also on programmes that would ultimately benefit them.
Actually, the decline in revenue collection from one of the major sources -- customs duty -- in view of continuous process of trade liberalisation and existence of a very poor, aggregate number of taxpayers compelled the government to choose a few unusual means to beef up revenue collection. The present interim administration rather applied a better formula to help mobilise tax revenues in addition to that collected through normal process. The National Board of Revenue(NBR), in keeping with the clean image of the interim government, offered in June last the people an opportunity to legalise their undisclosed income -- made through lawful means -- by paying 5.0 per cent penal charge, in addition to the normal rate of tax in a particular year. The time was first set for taking the opportunity to legalise such undisclosed income by July 31 last and it was later extended for another two months at the request from different quarters, including the chamber bodies.
The NBR chairman at the end of the extended period last Sunday expressed his dissatisfaction over the final outcome of the opportunity that was given for legalisation of undisclosed money. According to a report published in this daily Monday, a total of 32, 585 persons paid Tk 6.87 billion in taxes against their undisclosed income of Tk. 37.75 billion. He maintained that the owners of large undisclosed funds, which would run into billions, had been non-responsive to the opportunity. The people belonging to the middle-income group responded very positively to the offer. There could be two major reasons -- the fear factor and the tax rate -- that have discouraged many people from exploiting the opportunity to their advantage. The owners of large undisclosed yet lawfully earned funds might not have taken the risk of being exposed to scrutiny later by the agencies concerned since it often turns out to be fairly difficult to present documents even in support of money earned through legal means. Besides, some people found the tax rate imposed on undisclosed income was high and unfair compared to the rate offered earlier under the opportunity to whiten black money.
The NBR, instead of spending its valuable time on offering such opportunities, needs to concentrate more on the routine tax collection by encouraging an increased number of people to pay taxes and that too in correct amount. The scope for raising tax revenue to a large extent is there, particularly when only about 1.0 million people of a country of 150 million are registered tax payers. What is needed on the part of the NBR is the application of honest and sincere efforts to bring in more people under the tax net and encourage people to deposit the correct amount of tax at the end of a tax-year. Besides, the taxpayers feel encouraged to pay their taxes when they find that their money is being spent for the right cause and also on programmes that would ultimately benefit them.