Wider tax net, higher tax-GDP ratio

Out of a population of about 164.7 million in our country, there are only 5.62 million e-TIN holders. And the number of regular e-TIN holders i.e. those who file returns and pay taxes is about 2.47 million. Despite positive economic growth in recent years, Bangladesh has one of the lowest tax-to-GDP ratios (9.3 per cent) in the South Asian region. It is 23.1 per cent in Nepal, 16.8 per cent in India and 11.0 per cent in Pakistan. If we review the current emerging economic situation of the country, it will be seen that the number of people paying income tax should be 5 times. Despite the ability to pay income tax, many people in our country do not want to pay taxes. They try to avoid it. The main reason is fear of the tax collector. It turns out that those of us who pay income tax have to accept unreasonable harassment from the tax office. The same taxpayer is repeatedly squeezed like a lemon to meet the government's additional revenue target. But in almost all countries of the world, citizens voluntarily pay taxes to the government.
The following proposals may be considered to improve the tax to GDP ratio:
(i) Tax collecting authority shall have to change their attitude towards taxpayers. Field-level tax collecting authority's attitude must be friendly.
(ii) Every human being has a positive mindset. Tax authority shall have to knock the subconscious mind of the people so that they may feel guilty for not paying due tax to the government i.e. for the welfare of the distressed people as well as for development of our beloved country.
(iii) Widening of tax net is a much-talked-about subject when it comes to improving the tax to GDP ratio. No doubt, the low tax- GDP is an indication of the narrow tax net that has remained unchanged for the most part despite promises for expansion every year in the budget announcement. Digitalisation of the whole taxation system including digitalization of all the transactions under blockchain recording system through a national server is required to widen the tax net.
(iv) The state may introduce privilege tax cards for citizens in various income tax brackets, for example, Signatures, Gold, Silver, and Bronze Cards depending on the amount of tax paid. Citizens may also be rewarded by offering free government facilities according to their status.
(v) The government may keep accurate accounts of those who have paid income tax to the exchequer for ages in the past and make attachments for online issuance of a certificate of accumulated tax every year and subsequently pay monthly old age care and medical expenses to meet their human needs at least in the old age (retirement age), since in many cases it is seen that family bonding is not the same in our country as before. This will only increase further as the country develops. As a result, many people have to go to old homes as there is no income at old age. Moreover, children are now moving abroad. So they cannot be relied upon. Therefore, there should be an allowance for one who pays Tk. 5 million of tax for life, preferably pension allowance. If the government provides such types of economic incentives to the people in this position, then future generations like us in our country and abroad will be motivated to pay taxes themselves and the state will not have to actively seek out taxpayers if this system is introduced.
Finally, considering the above issues in details, a comprehensive plan is required to start a new chapter by formulating policies to maintain accurate accounts of those who have paid taxes for ages in the past and they should be rewarded by offering free government facilities according to their status. Thereafter the number of willing taxpayers will automatically increase.

(The writer is Additional Managing Director & CFO of Eastland Insurance Company Ltd.)
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