Reforming the tax administration
Wednesday, 8 October 2008
THE National Board of Revenue (NBR) earned Tk. 21 billion more aggregate in tax revenue last fiscal than what was targeted for that year. This was a unique feat on the part of the tax collectors in the 37-year old history of Bangladesh. However, given their performance level until the recent past, it is hard to give full credit to the taxmen for that 'feat'. The fear factor that originated from a massive and anti-tax dodging and anti-grant drives -- though both are not, ipso facto, of the same nature because tax-evaded incomes are not always corruption-tainted ones in the sense of corruption being defined, in the given socio-political context of Bangladesh, as abuse of public power or positions for amassing private fortunes -- under the ongoing emergency rule, no doubt, played an important role in the larger collection of tax revenues. That was particularly the case with income tax in the last fiscal. The less-than-expected collection of income tax revenue from normal taxpayers as well as holders of untaxed legal money until the September last during the current fiscal is a pointer to that fact. With the relaxation of emergency rule in some cases because of the upcoming national election, the fear factor is found to be less intense this time.
There is no denying that a sustained increase in the number of taxpayers and tax revenue income can only be ensured under an efficient tax administration. Unfortunately, Bangladesh is yet to achieve that objective, despite some sporadic attempts made to beef up the efficiency level of the taxmen at the initiatives of the multilateral donors. However, the World Bank (WB), back in 2004 came up with a Tk 3.0 billion project, styled Revenue Administration Modernisation Project (RAMP), with the objectives of bringing about major structural changes in the tax administration, simplifying revenue collection procedures and developing human resources. But the immediate past government dragged its feet and postponed a final decision on the project. The present caretaker administration, for reasons best known to it, has also been displaying a sort of lukewarm attitude towards the project. A report published in this daily last Monday said the launching of the project would be delayed further since the authorities concerned would like to examine the contents of the project more closely.
Traditionally, almost every tier of Bangladesh administration is averse to reforms that usually hurt the vested interests. And the tax administration is no exception. The level of laxity and indolence, for reasons not unknown to many, among taxmen is quite high, in line with the cases with police and land administration officials. It is not unlikely that a section of tax officials are opposing the RAMP to safeguard their own interests. The Chittagong Customs House Automation project which was launched by the Chief Adviser to the Caretaker government last Monday would illustrate here well such a strong opposition to reforms by the taxmen. When the project was initiated to replace the obsolete 'direct traders input (DTI)' with the ICT-based automation system, the Customs authority, allegedly, posted out the official involved in automation planning. But as the Chittagong Chamber of Commerce and Industry (CCC&I) expressed its willingness to be a partner in the automation project and the government high-ups approved it for implementation, the opposition subsided. And surmounting the obstacles, the project has now got off the ground.
Given the country's tax-GDP ratio at one of the lowest levels among the developing economies in the world, there is no alternative to reform the tax administration. This is an imperative for generating more revenue domestically, particularly when the global aid climate is becoming increasingly tight. The decision to examine the pros and cons of the latest WB-funded RAMP may be right. But it should have been completed much earlier. However, it is better late than never. If the project is found well-designed and time-befitting, there should not be any further delay in starting it.
There is no denying that a sustained increase in the number of taxpayers and tax revenue income can only be ensured under an efficient tax administration. Unfortunately, Bangladesh is yet to achieve that objective, despite some sporadic attempts made to beef up the efficiency level of the taxmen at the initiatives of the multilateral donors. However, the World Bank (WB), back in 2004 came up with a Tk 3.0 billion project, styled Revenue Administration Modernisation Project (RAMP), with the objectives of bringing about major structural changes in the tax administration, simplifying revenue collection procedures and developing human resources. But the immediate past government dragged its feet and postponed a final decision on the project. The present caretaker administration, for reasons best known to it, has also been displaying a sort of lukewarm attitude towards the project. A report published in this daily last Monday said the launching of the project would be delayed further since the authorities concerned would like to examine the contents of the project more closely.
Traditionally, almost every tier of Bangladesh administration is averse to reforms that usually hurt the vested interests. And the tax administration is no exception. The level of laxity and indolence, for reasons not unknown to many, among taxmen is quite high, in line with the cases with police and land administration officials. It is not unlikely that a section of tax officials are opposing the RAMP to safeguard their own interests. The Chittagong Customs House Automation project which was launched by the Chief Adviser to the Caretaker government last Monday would illustrate here well such a strong opposition to reforms by the taxmen. When the project was initiated to replace the obsolete 'direct traders input (DTI)' with the ICT-based automation system, the Customs authority, allegedly, posted out the official involved in automation planning. But as the Chittagong Chamber of Commerce and Industry (CCC&I) expressed its willingness to be a partner in the automation project and the government high-ups approved it for implementation, the opposition subsided. And surmounting the obstacles, the project has now got off the ground.
Given the country's tax-GDP ratio at one of the lowest levels among the developing economies in the world, there is no alternative to reform the tax administration. This is an imperative for generating more revenue domestically, particularly when the global aid climate is becoming increasingly tight. The decision to examine the pros and cons of the latest WB-funded RAMP may be right. But it should have been completed much earlier. However, it is better late than never. If the project is found well-designed and time-befitting, there should not be any further delay in starting it.