Persuasion, not prosecution, holds the key
Wednesday, 5 December 2007
Shamsul Huq Zahid
The individual tax identification number (TIN) holders paid a record amount of tax-Tk. 7.39 billion-- for the current assessment year (2007-08) within the deadline expiring at 8 pm last Sunday. The amount is almost threefold of the same collected last year from the individual TIN holders. Yet the high officials of the National Board of Revenue (NBR) seem to be unhappy because they had expected more.
But given the track record of the taxpayers in Bangladesh, there is no reason for the NBR men to feel frustrated by the outcome of their drive to augment income tax revenue this year. The trend in individual income tax collection rather indicates that the revenue earning from tax on profits of companies, listed and unlisted, would be relatively higher this year than that of the previous years.
The revenue from individual taxpayers may finally reach the much-desired double digit as many people in the cyclone battered areas for logical reasons could not submit their returns in time and some others would be submitting the same in the next few days paying fixed penal charges-Tk 1000 at a time and Tk. 50 for each day after the expiry of the deadline.
According to NBR statistics, the number of individual TIN holders who submitted returns this year was 1,09,623 more than that of the last year. The NBR chairman found the increase unsatisfactory and, according to a report published in this daily Tuesday, decided to carry out a study to ascertain the reasons for less-than-expected submission of returns by individual taxpayers.
There may be genuine reasons for the NBR officials to be less euphoric about the outcome of the drive to mop up increased income tax revenue, but many would tend to describe the progress made, in terms of both revenue collection and number of returns, remarkable.
The reported rise in the number of tax returns has helped higher mobilisation of income tax revenue this year. But the number certainly has not been enough for a threefold jump in revenue collection. The old taxpayers, it seems, this time have made their disclosures rather fairly than previous years. And it is evident from the income tax revenue received, particularly, from the professionals. The physicians paid taxes worth Tk. 97 million, bankers Tk. 58 million and lawyers Tk 20 million. Though statistics relating to tax payments in earlier years is not available, reports published in newspapers in the recent past on the individual income tax paid by the country's leading physicians and lawyers are sufficient to assume that these people this year have paid much bigger amount to the NBR.
There is no denying that the ongoing drive against tax evasion and graft has contributed largely to the higher mobilisation of income tax revenue. The campaign launched by the NBR to encourage people to pay their taxes also had a positive impact. In this context, it would be fair to give the devil its due. The immediate past NBR chairman, Badiur Rahman, no doubt, had made more enemies than friends, particularly in the business circle by talking tough, at times, unnecessarily. Yet he could arouse a sort of fear or urgency, whatever you like to call it, among the taxpayers. That must have paid a dividend as far as this year's income tax revenue is concerned.
The incumbent NBR chairman, Muhammad Abdul Mazid, a soft-spoken civil servant also appears to be firm in achieving his main objective-higher revenue mobilisation. It does also sound quite logical when he talks about 'chasing' the eligible taxpayers, who have failed to submit their returns, for the sake of being fair to the honest taxpayers.
It is most likely that the trend that has been set this year in tax collection would continue and the TIN holders who have failed to submit their returns would feel encouraged to join the process. But any action to scare the defaulters might ultimately prove counter-productive. Persuasion rather than prosecution, it seems, deliver better results and the NBR should strengthen its campaign to encourage more people to pay tax.
There is yet another issue that deserves immediate action on the part of the NBR. The number of individual TIN holders is estimated to be 2.2 million across the country. The number of returns submitted every year if seen in context of the number of the total TIN holders would appear highly inadequate. But it is assumed that there exists a discrepancy in the number of total TINs issued by the tax offices and the number of actual taxpayers. The NBR does need to carry out a survey to resolve the issue.
Besides, for consolidating the gains achieved in income tax revenue collection this year, the NBR hierarchy should devote itself to the task of removing the taxmen-phobia among the taxpayers. The factors that have been discouraging the genuine taxpayers from personally visiting tax offices are not unknown. This is the most appropriate time to get rid of those factors.
The individual tax identification number (TIN) holders paid a record amount of tax-Tk. 7.39 billion-- for the current assessment year (2007-08) within the deadline expiring at 8 pm last Sunday. The amount is almost threefold of the same collected last year from the individual TIN holders. Yet the high officials of the National Board of Revenue (NBR) seem to be unhappy because they had expected more.
But given the track record of the taxpayers in Bangladesh, there is no reason for the NBR men to feel frustrated by the outcome of their drive to augment income tax revenue this year. The trend in individual income tax collection rather indicates that the revenue earning from tax on profits of companies, listed and unlisted, would be relatively higher this year than that of the previous years.
The revenue from individual taxpayers may finally reach the much-desired double digit as many people in the cyclone battered areas for logical reasons could not submit their returns in time and some others would be submitting the same in the next few days paying fixed penal charges-Tk 1000 at a time and Tk. 50 for each day after the expiry of the deadline.
According to NBR statistics, the number of individual TIN holders who submitted returns this year was 1,09,623 more than that of the last year. The NBR chairman found the increase unsatisfactory and, according to a report published in this daily Tuesday, decided to carry out a study to ascertain the reasons for less-than-expected submission of returns by individual taxpayers.
There may be genuine reasons for the NBR officials to be less euphoric about the outcome of the drive to mop up increased income tax revenue, but many would tend to describe the progress made, in terms of both revenue collection and number of returns, remarkable.
The reported rise in the number of tax returns has helped higher mobilisation of income tax revenue this year. But the number certainly has not been enough for a threefold jump in revenue collection. The old taxpayers, it seems, this time have made their disclosures rather fairly than previous years. And it is evident from the income tax revenue received, particularly, from the professionals. The physicians paid taxes worth Tk. 97 million, bankers Tk. 58 million and lawyers Tk 20 million. Though statistics relating to tax payments in earlier years is not available, reports published in newspapers in the recent past on the individual income tax paid by the country's leading physicians and lawyers are sufficient to assume that these people this year have paid much bigger amount to the NBR.
There is no denying that the ongoing drive against tax evasion and graft has contributed largely to the higher mobilisation of income tax revenue. The campaign launched by the NBR to encourage people to pay their taxes also had a positive impact. In this context, it would be fair to give the devil its due. The immediate past NBR chairman, Badiur Rahman, no doubt, had made more enemies than friends, particularly in the business circle by talking tough, at times, unnecessarily. Yet he could arouse a sort of fear or urgency, whatever you like to call it, among the taxpayers. That must have paid a dividend as far as this year's income tax revenue is concerned.
The incumbent NBR chairman, Muhammad Abdul Mazid, a soft-spoken civil servant also appears to be firm in achieving his main objective-higher revenue mobilisation. It does also sound quite logical when he talks about 'chasing' the eligible taxpayers, who have failed to submit their returns, for the sake of being fair to the honest taxpayers.
It is most likely that the trend that has been set this year in tax collection would continue and the TIN holders who have failed to submit their returns would feel encouraged to join the process. But any action to scare the defaulters might ultimately prove counter-productive. Persuasion rather than prosecution, it seems, deliver better results and the NBR should strengthen its campaign to encourage more people to pay tax.
There is yet another issue that deserves immediate action on the part of the NBR. The number of individual TIN holders is estimated to be 2.2 million across the country. The number of returns submitted every year if seen in context of the number of the total TIN holders would appear highly inadequate. But it is assumed that there exists a discrepancy in the number of total TINs issued by the tax offices and the number of actual taxpayers. The NBR does need to carry out a survey to resolve the issue.
Besides, for consolidating the gains achieved in income tax revenue collection this year, the NBR hierarchy should devote itself to the task of removing the taxmen-phobia among the taxpayers. The factors that have been discouraging the genuine taxpayers from personally visiting tax offices are not unknown. This is the most appropriate time to get rid of those factors.