Restoring macroeconomic stability rests on revenue policy upgrade

A time-bound structural and policy rejig of the revenue system is imperative for restoring and sustaining Bangladesh's macroeconomic stability as insufficient domestic resources upend government plans and generate overall volatility.
To this end, a multi-stakeholder taskforce on revenue reform is likely to recommend that the government complete major tax-policy reforms in near and midterms within next five years, beginning under the current interim government and finishing under the upcoming elected one.
The 'National Taskforce on Tax Restructuring', formed in October last following the political regime change, in order to review the country's revenue framework, is scheduled to submit its report by January 31, 2026, in line with its mandate.
The taskforce will focus on structural adjustments and development of the overall tax framework to help Bangladesh achieve its fiscal goals.
Talking to The Financial Express, Dr Zaidi Sattar, who heads the taskforce, said the report would place strong emphasis on revenue-policy reforms aimed at removing longstanding bottlenecks to trade and investment.
According to a notification issued in October last, the taskforce will prepare recommendations for raisin the tax-to-GDP ratio to a desired level and suggest both short- and long-term policy measures for a business- and trade-friendly tax regime that supports overall economic growth.
"Although we were asked to provide short- and long-term recommendations, we believe most of the reforms need to be implemented within the medium term," says the economist.
Dr Sattar, chairman of the Policy Research Institute (PRI), thinks the current interim government may be able to implement some of the recommendations but the bulk of the reforms would need to be carried forward by the next elected government.
Referring to the ongoing process of bifurcation of the revenue administration, he says the government is creating two separate divisions but the committee's recommendations would focus solely on the tax-policy division.
Responding to a query on the tax-GDP target up to 2035 set in the medium and long-term revenue strategy (MLTRS) framed by the National Board of Revenue, Dr Sattar said Bangladesh must raise the ratio in line with its transition from the least-developed country (LDC) status.
The NBR targets to raise Bangladesh's tax-to-GDP ratio to 10.5 by the fiscal year 2034-35, as part of its newly formulated 10-year revenue strategy.
"For a graduating LDC, the tax-to-GDP ratio should be upgraded to an average range of 15 to 20 per cent," he added.
The interim government formed the high-powered national taskforce to restructure the country's tax system with the aim of boosting revenue collection and raising the tax-GDP ratio to an acceptable level.
The other members of the panel include Dr. Sultan Hafiz Rahman, Professorial Fellow at BRAC Institute of Governance and Development (BIGD), Dr. Syed Mainul Ahsan, Professor Emeritus at Concordia University, Canada, Dr. Mohammad Zahid Hossain, Chairman of Bangladesh Krishi Bank, and Dr. Sajjad Zohir, Executive Director of the Economic Research Group (ERG).
In September last, the government dissolved the previous committee on NBR reform. The present taskforce was formed within a week of the dissolution of the committee.

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