Paying right amount of tax

My attention has been drawn to an article titled "VAT law a tool to fetch revenue, not fleece taxpayers" by M S Siddiqui which was published in the Views and Reviews page of the Financial Express on January 08, 2015. In the article, the writer has raised a number of issues, some of which deserve more deliberation.
In the first three paragraphs of the article, Siddiqui introduces VAT, discusses on its various advantages and identifies VAT as an efficient tool for revenue collection. In the fourth paragraph, he dwells on the trends of VAT revenue collection since its introduction in Bangladesh in 1991 and notes that during the last couple of years, the growth of VAT revenue has been less compared to other taxes which warrant government's efforts to introduce a new VAT law in July 2016. In the fifth paragraph, he mentions that the existing and forthcoming VAT laws of our country have many regressive clauses.
The writer cites VAT as a regressive tax and tries to substantiate his argument with an example of poor paying more as VAT than the rich, which in my view does not fit in the notion of regressivity. Theoretically, if with the increase in tax base, tax increases proportionately lower or if with the decrease in tax base, tax decreases proportionately higher, the taxation system is considered as regressive. Therefore, poor spending greater portion of their income on consumption than the rich has little to do with regressivity. The rich are paying Income Tax and Supplementary Duty more than the poor.
The writer mentions that the VAT law has been set to increase tax collection mostly focusing on a mindset of trading character of business but there is no policy support for industrialisation. There is no effort to make fair calculation of tax. Such observations of the writer do not hold true. Currently, our VAT system mostly emphasises on import and production not trading. Presently, a small share of our VAT is collected from trading stage. Among import, production and trading stages, VAT mechanism remains most unorganised and evasion-prone at trading stage. There are a number of mechanisms at trading stage, namely: standard 15 per cent VAT with input tax credit, 2.0 per cent and 4.0 per cent VAT without input tax credit, package VAT for small shop-keepers and sale without payment of VAT with regard to first sale after import if the value addition is 26.67 per cent. The very basic principle of VAT i.e. input tax credit does not mostly function at our trading stage VAT. So, the writer's observations apparently lack objectivity.
Without showing any valid reason, the writer mentions that in our VAT system, there is no policy support for industrialisation. Although the principal objective of the VAT system is revenue collection, in today's welfare state it also takes into account other socio-economic objectives, like industrialisation. In both the existing and the forthcoming VAT laws, there are provisions for small enterprises paying at much lower rate than the larger ones only to facilitate the smaller ones to remain competitive.
In the existing VAT law, cottage industries defined in terms of certain criteria do not require to pay any VAT. In the forthcoming VAT law, all enterprises up to a certain limit of yearly turnover are exempted from VAT. These are certainly policy support for industrialisation. The Government has many other policy supports for industrialisation in the structure of its industrial policy, trade policy, export policy but not in revenue policy alone.
The writer mentions that there is no effort to make fair calculation of tax. Without mentioning the boundaries of fairness, the writer has identified a few outcomes of it. Such as, fair calculation of tax leads to fair competition among business houses. In his opinion, fair calculation of tax also increases economic activities by ensuring a level playing field. By nature, VAT is such a tax where fairness can not be related vigorously compared to other taxes, such as Income Tax, Supplementary Duty, Customs Duty etc.
With an effort to promote fairness in the existing VAT system, the concepts of tariff value, truncated base and broader exemptions have been brought in which had been found sharply detrimental to the development of VAT system. Therefore, in the forthcoming VAT law, these are set to be done away with. One of the basic principles of VAT is: lowest possible single rate and widest possible coverage, can not pay enough heed to the fair calculation of tax.
The writer's references of Section 27 regarding exemption of VAT on personal consumption and Section 70 on assets for private purpose appear to be flawed. The Sections do not match with either the existing or the forthcoming VAT law. Throughout the world, under baggage rules some items are allowed tax-free and on some items fix amount of tax is imposed for purposes of easy clearance of passengers. The writer has truly mentioned that it is conflicting with VAT philosophy. But the government has to uphold many other philosophies such as hassle-free clearance of passengers at airport, keeping proper regards to the personal belongings and professional needs of the passengers, etc. other than VAT philosophy alone.
The writer finds the provision of realisation of outstanding VAT from undefined 'relatives', burden of proof on taxpayers and appeal against payment of 10 per cent of claimed VAT incorporated in the forthcoming VAT law as violative of fundamental rights guaranteed in the Constitution. The said law was vetted by the Ministry of Law, Justice and Parliamentary Affairs and by the Parliament Secretariat before being placed to parliament, inter alia, to check constitutionality. The writer also finds the provision of freezing bank account of taxpayers as harsh and discretionary. In fact, fiscal laws aim at taking away money from people's pocket and therefore it can not be sweeter.
The writer has rightly emphasised on capacity building of the VAT department. With a very small number of manpower and poor logistics support, the cost of VAT collection stands much lower compared to other taxes for which NBR (National Board of Revenue) should be lauded.
The very title of the article is not realistic. VAT law is for collecting money from people for the government. This can not be equated with fleecing the taxpayers. It is the obligation of the taxpayers as citizens of the country to pay right amount of tax.
Our taxation system has inherent flaws. There is no proper taxation culture as well. Development in both is the need of the hour. The citizens need to have basic tax education. Dialogue regarding taxation matters in the media is a good sign for imparting tax education and for development of good taxation culture. Taxpayers and tax collectors should not view each other with hostility. The correct approach should be payment and collection of just amount of tax.
Dr Md Abdur Rouf is Director, Central Intelligence Cell and Deputy Project Director, VAT Online Project, National Board of Revenue (NBR).  roufcus@yahoo.com.