Reform of tax policies, admn seen vital to maximise revenue

Economists and businesses underscored Saturday the need for reforming both tax policies and tax administration to help boost mobilisation of internal resources.
Taking part in a pre-budget dialogue, held at a city hotel, they were unanimous that the government instead of hiking the tax rates should broaden the tax net since there was enormous potential to do that.
The participants also said the tax policies should be business friendly and, to this end, the tax authorities should consult with its main stakeholders.
The pre-budget dialogue on 'Revenue Maximisation Opportunities' was organised by the Financial Express (FE).
Dr Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh (PRI), Prof. MA Taslim, the immediate past chairman of the department of  Economics at the University of Dhaka, Dr. Nasir Uddin Ahmed, former chairman of the National Board of Revenue (NBR) and member, Anti-corruption Commission (ACC),  Ms. Rupali Chowdhury, president of the Foreign Investors' Chamber of Commerce and Industry (FICCI), Dr Md. Yunus, senior research fellow at the Bangladesh Institute of Development Studies (BIDS) and professor Dr Muhammad Mahboob Ali of the Daffodil International University were the discussants.
Mr. Moazzem Hossain, editor of the FE, moderated the discussion.
Speaking at the function, Dr Zaidi Sattar said there is always a gap between the tax mobilised and the potential to collect the same.
He said the tax administration has been trying to squeeze out more from the existing taxpayers instead of expanding the tax base.
"We're not attaching importance to the areas where necessary, rather we're exploiting the existing ones."
"In my view, through this practice, the tax authority is missing its objective…"
Dr Sattar said the tax authorities have failed to fully implement the automation project that was started in the early 90s.
"It has been about 25 years of customs automation move, but still many jobs are done manually there", he said.
He said the tax policy should be pro-business, pro-growth and pro-export.
PRI Chairman said an anti-export bias is very much evident in the government's tax policy. This, he said, has resulted in a fewer number of products now dominating the country's export basket.
He said import-substituting production units are getting greater protection, which is hurting the growth of export industries.  
He said the modern concept is to go with the production network and Bangladesh can cash in on such network opportunities.
Dr. Sattar said tax regime is very much important as far as this type of integrated production network developed among a number of countries.
Professor MA Taslim said one of the key reasons for the eligible taxpayers showing their reluctance to pay tax to the government is the lack of transparency in the spending of the tax revenue.
He said the situation in other countries is altogether different as the taxpayers are kept informed about the government's spending.
Prof. Taslim said the benefits that the taxpayers get in other countries are very much visible, but the situation in Bangladesh is different.
He referred to contradictory statements coming from the finance ministry honchos about the extent of loss being caused to the economy by the ongoing troubled politics and said one can well see the negative effects of the political turmoil on the economic growth.
Prof. Taslim said Bangladesh will not be able to link itself to the 'factory Asia' without the inflow of foreign direct investment (FDI) in adequate volume.
Former NBR chairman Nasir Uddin Ahmed said there is need for strengthening the relationship between the NBR and the organisations, including the internal resources division, controlling it to help boost revenues.
He said there is need for an integrated management system for growth of the tax revenues.
Mr Nasir said people want to pay taxes and the response of the taxpayers seen at the tax fairs is a pointer to that fact.
The former boss of the NBR said a significant volume of tax revenue is now stuck in thousands of court cases.
He said alternative dispute resolution (ADR) might be a potential instrument to resolve disputes with the major taxpayers.
He said: "We've realised Tk 60 billion from mobile phone operators through alternative dispute resolution."
He said 80 per cent cases could be solved through the ADR.
The former NBR chairman felt that non-cadre officials at the NBR were found to be a major obstacle to any move to reform the tax administration.
BIDS senior research fellow Dr Yunus said Bangladesh lacked enough research activities in areas of taxation.
"In the absence of proper research, we don't know the actual tax potentials of Bangladesh. Nor we know the extent of tax evasion", he said
The BIDS researcher said: "We also don't know what should be the ideal tool for raising the taxes. Should it be tax base or rate?"
Dr Yunus listed the black money whitening provision as a major demoralising factor for the honest taxpayers.
He said tax rates need to be rationalised.
He alleged that many companies had been abusing the tax holiday facility by launching sister concerns one after another.
The BIDS researcher said there are many anomalies in the tax system and this should be identified through rigorous research activities.
Speaking at the function, Rupali Chowdhury said there have been many good instances in the economy since 2009.
She, however, said there existed mistrust between the NBR and the tax payers.
"We are stakeholders, so the authorities should talk to us before taking any decision," Ms Chowdhury, also managing director of Berger Bangladesh, said.
She said the existing mistrust between the taxpayers and the taxmen would largely go away if there were effective dialogue and automation.
The FICCI president felt that tax burden in Bangladesh is too high.
Ms. Rupali Chowdhury said without addressing the issues such infrastructural hurdles, land disputes and energy availability, it is hard to expect any large FDI inflow.
Jasimharoon@yahoo.com