The country should strengthen tax automation to remove fear of taxpayers in respect of existing complex tax system.
Even though indirect tax is a major source of revenue, VAT burden may be reduced. Instead of a uniform 15 per cent VAT for all consumer goods it should be reduced in the case of some essentials.
SUPRO (Campaign for Good Governance) made these recommendations after conducting a study on "Tax, Tax Gap Analysis and Tax System in Bangladesh".
The findings of the study would be revealed tomorrow (Monday). Shusashoner Jonny Procharavizan-SUPRO a leading civil society network in Bangladesh of more than 600 NGOs, CBOs and Activists organised a meeting on the occasion of publishing the report.
Chairman of the National Board of Revenue (NBR) Md. Ghulam Hossain will be present as the chief guest on this special occasion while Action Aid Bangladesh Country Director Farah Kabir, Professor of Department of Development Studies of Dhaka University and Director of Center on Budget and Policy Dr. M. Abu Eusuf, Associated Country Director In-charge of Oxfam Conor Molly, will attend as the special guests.
SUPRO has conducted a baseline study on "Tax, Tax Gap Analysis and Tax System in Bangladesh". Among other objectives, the study was mainly focused on finding the potential ways on how to engage people in raising voice in favour of pro-poor tax policy and capturing ways on engaging policy makers and administrators of the government in introducing pro-poor tax policy.
The study said despite government initiation of several administrative and policy reforms in the tax system, the performance is still unsatisfactory as compared to other countries at a similar stage of economic development in terms of tax-GDP ratio.
"The tax- GDP ratio should be 20 per cent for sound management of public sector and economic development and Bangladesh is well far from that."
In Bangladesh, the collection of tax revenue mainly depends on indirect tax sources rather than direct taxes (direct tax 25.05 per cent and indirect tax 57.57 per cent in 2011-12) where VAT is important source directly and indirectly affecting poor and general people.
The study finds that the voice from grassroots level has never been considered with much importance to reformulate the tax system of Bangladesh. Moreover, it also requires greater understanding of citizens' perception and opinion about tax, tax system and tax justice. There is a need of baseline information and analysis on different issues of tax to undertake future policy interventions.
