Strengthening revenue collection efforts
Wednesday, 19 November 2008
The very low tax-GDP ratio in Bangladesh provides hardly any operational leeway for augmenting revenue earnings of the government for meeting its diverse operational and development needs. This is more so now, when prospects for external aid disbursements remain clouded because of the possible adverse fall-outs from the global financial crisis. Only 0.6 million people out of a total of 140 million or more in the country pay tax annually. This state of tax payment is dismal, to say the least about it. Following the 1/11 changeover, a countrywide drive was launched to identify the potential taxpayers, particularly in metropolitan Dhaka and bring them under the tax net, alongwith the drive against some bigwig tax evaders. The anti-tax evasion drive produced some welcome results for the National Board of Revenue (NBR) as it fetched a record amount of income tax in the last financial year. The trend in tax collection that was disappointing in the initial months of the current fiscal, did show some improvements as the revised deadline for filing of returns came to a close. The earning is expected to surpass the budgetary projection as far as collection of individual tax is concerned.
But what remains disconcerting is that despite identification of over 100,000 potential taxpayers through an ongoing countrywide survey by the NBR, none of them could be brought under the tax net this fiscal. A report published in this daily last Monday, quoting an NBR official, identified the lack of coordination between the survey teams and the tax zones as the main reason for this lapse. Among the potential taxpayers identified by the survey teams, are a large number of businessmen in old Dhaka and professionals working in offices in posh Gulshan-Banani area. The FE report stated that the concerned NBR officials could not produce any official statistics about the TIN (tax identification number) coverage of the newly identified potential taxpayers. Actually, there was no proper guideline as to who would issue the TINs. Such lack of coordination or indifference on the part of officials concerned does prove the fact that the tax administration has yet to go a long way in improving its performance. For quite sometime, the people have been hearing a lot about donor-funded reforms in the NBR, including those relating to automation and creation of large tax-payer units (LTUs). But reforms that are essential to bring about a change in the mindset and approach of the people manning the tax departments, are yet to come by, in essence.
It has been observed that once an individual starts paying income tax, he or she rarely defaults in submitting annual tax returns. A sort of psychological compulsion does play a role in this respect. So, addition of 100,000 or more taxpayers would have not only added to the revenue income of the government but also created a sense of obligation among other potential taxpayers who are yet to be identified by the revenue department. Notwithstanding an apparent complacency among a section of governmental functionaries, the country, in all probability, will not remain immune to the fallouts from the current global financial crisis. Some sectors of the economy have already been hit. Indications are there that the government's revenue earning would also come under stress and strain in the coming months, leading to higher than projected borrowing from banks and non-banking sources. In this context, the NBR has to gear up its related departments to perform better as far as collection of all types of taxes is concerned to provide some relief to the finance ministry.
But what remains disconcerting is that despite identification of over 100,000 potential taxpayers through an ongoing countrywide survey by the NBR, none of them could be brought under the tax net this fiscal. A report published in this daily last Monday, quoting an NBR official, identified the lack of coordination between the survey teams and the tax zones as the main reason for this lapse. Among the potential taxpayers identified by the survey teams, are a large number of businessmen in old Dhaka and professionals working in offices in posh Gulshan-Banani area. The FE report stated that the concerned NBR officials could not produce any official statistics about the TIN (tax identification number) coverage of the newly identified potential taxpayers. Actually, there was no proper guideline as to who would issue the TINs. Such lack of coordination or indifference on the part of officials concerned does prove the fact that the tax administration has yet to go a long way in improving its performance. For quite sometime, the people have been hearing a lot about donor-funded reforms in the NBR, including those relating to automation and creation of large tax-payer units (LTUs). But reforms that are essential to bring about a change in the mindset and approach of the people manning the tax departments, are yet to come by, in essence.
It has been observed that once an individual starts paying income tax, he or she rarely defaults in submitting annual tax returns. A sort of psychological compulsion does play a role in this respect. So, addition of 100,000 or more taxpayers would have not only added to the revenue income of the government but also created a sense of obligation among other potential taxpayers who are yet to be identified by the revenue department. Notwithstanding an apparent complacency among a section of governmental functionaries, the country, in all probability, will not remain immune to the fallouts from the current global financial crisis. Some sectors of the economy have already been hit. Indications are there that the government's revenue earning would also come under stress and strain in the coming months, leading to higher than projected borrowing from banks and non-banking sources. In this context, the NBR has to gear up its related departments to perform better as far as collection of all types of taxes is concerned to provide some relief to the finance ministry.