Revealing, staggering figures
Tuesday, 22 December 2009
Mahmudur Rahman
It's anyone's guess as to how much liquidity there actually is available in the Bangladesh economy. The easy pickings are the $10 billion reserves and the Tk 350 billion in the banks. But let's not leave out that which is available in the hands of the public.
Grameenphone's debut on the stock exchange raked in Tk 17 billion cash of which Tk 4.86 billion were ultimately secured in the form of investment. That would suggest that there was nearly Tk 13 billion available from various sources for investment. While stock market analysts welcomed the entry of a solid business house and called for more in the exchange, it also raised some pertinent questions. There wasn't too much in terms of transactions on the exchange that might suggest this was the source of the cash generated. Nor is it that banks would have dished out loans for the purpose. And so the obvious generalisation is that money is available in the country. This, in addition to the very large excess liquidity.
According to the National Board of Revenue (NBR), they struggled to attract more than 0.75 million tax returns against a 2.2 million tax identification numbers or TINs. Given that the TINs issued so far may have been plagued by irregularities, there is little to doubt that the number of individuals and firms that can and should pay their taxes should be a much more. After all it just does not stand to reason that only 0.75 million people have an income above the minimum tax slab. And every year the inevitable stance of the government and NBR is that a "drive" would be taken to rope in rogue tax evaders.
It is widely believed that there are at least 10 million people who should be paying tax and shy away either because they are unwilling to pay taxes or who just do not want to go through the hassle that is often created by the tax man. The unwillingness comes partly because some people just do not see why they have to part with their hard-earned money to fund general inefficiency and wastage of public exchequer funds. Big businesses are by and large just as guilty as the individual tax payer in this matter. While much has been done to reduce the complexities of tax submission, the discretionary powers available with tax officials can make such submissions very, very difficult.
The two elements of tax-slabs and simplicity are where the major problem lies. The existing slabs are somewhat punitive compared to the cost of living, especially in the cities. As for simplicity, few in their right minds would want to go through the ordeal of visiting the tax man's office.
The current slabs were designed to ensure that the rich bear the greater burden of tax- a concept neatly side-stepped through the efforts of tax lawyers and a section of not so scrupulous tax officials. The less affluent do their best to ensure that they somehow stay within the lowest slab so as to submit a zero-tax return incurring the minimum Tk 2000 tax.
Going by this minimum tax, the government could actually rake in Tk 20 billion from the 1.0 million eligible tax payers, not taking into account the higher income group. And given the latest move to employ students to help in identifying new tax payers maybe this is a way forward.
(The writer is a former head of corporate and regulatory affairs of British-American Tobacco Bangladesh and former CEO of Bangladesh Cricket Board. He can be reached at mahmudrahman@gmail.com)
It's anyone's guess as to how much liquidity there actually is available in the Bangladesh economy. The easy pickings are the $10 billion reserves and the Tk 350 billion in the banks. But let's not leave out that which is available in the hands of the public.
Grameenphone's debut on the stock exchange raked in Tk 17 billion cash of which Tk 4.86 billion were ultimately secured in the form of investment. That would suggest that there was nearly Tk 13 billion available from various sources for investment. While stock market analysts welcomed the entry of a solid business house and called for more in the exchange, it also raised some pertinent questions. There wasn't too much in terms of transactions on the exchange that might suggest this was the source of the cash generated. Nor is it that banks would have dished out loans for the purpose. And so the obvious generalisation is that money is available in the country. This, in addition to the very large excess liquidity.
According to the National Board of Revenue (NBR), they struggled to attract more than 0.75 million tax returns against a 2.2 million tax identification numbers or TINs. Given that the TINs issued so far may have been plagued by irregularities, there is little to doubt that the number of individuals and firms that can and should pay their taxes should be a much more. After all it just does not stand to reason that only 0.75 million people have an income above the minimum tax slab. And every year the inevitable stance of the government and NBR is that a "drive" would be taken to rope in rogue tax evaders.
It is widely believed that there are at least 10 million people who should be paying tax and shy away either because they are unwilling to pay taxes or who just do not want to go through the hassle that is often created by the tax man. The unwillingness comes partly because some people just do not see why they have to part with their hard-earned money to fund general inefficiency and wastage of public exchequer funds. Big businesses are by and large just as guilty as the individual tax payer in this matter. While much has been done to reduce the complexities of tax submission, the discretionary powers available with tax officials can make such submissions very, very difficult.
The two elements of tax-slabs and simplicity are where the major problem lies. The existing slabs are somewhat punitive compared to the cost of living, especially in the cities. As for simplicity, few in their right minds would want to go through the ordeal of visiting the tax man's office.
The current slabs were designed to ensure that the rich bear the greater burden of tax- a concept neatly side-stepped through the efforts of tax lawyers and a section of not so scrupulous tax officials. The less affluent do their best to ensure that they somehow stay within the lowest slab so as to submit a zero-tax return incurring the minimum Tk 2000 tax.
Going by this minimum tax, the government could actually rake in Tk 20 billion from the 1.0 million eligible tax payers, not taking into account the higher income group. And given the latest move to employ students to help in identifying new tax payers maybe this is a way forward.
(The writer is a former head of corporate and regulatory affairs of British-American Tobacco Bangladesh and former CEO of Bangladesh Cricket Board. He can be reached at mahmudrahman@gmail.com)