Taxpayers evaded paying Tk 21,000 crore in taxes last fiscal year, and tax evasion is one of the major challenges the National Board of Revenue (NBR) faces in enhancing revenue collection, said a study published by Transparency International, Bangladesh (TIB).
If the amount had been collected, the actual NBR revenue would have been 34 percent more than it was in fiscal 2009-10, the study showed. It is 2.8 percent of the national income in the same year, TIB said.
The tax officials' involvement in corrupt practices, a high rate of indirect tax and people's unwillingness to pay taxes due to apparently complex procedures are the main challenges the NBR is facing now, according to the study.
The study titled NBR: Challenges to Transparency and Accountability and Way Out was presented at a roundtable organised by TIB at the Cirdap auditorium in the city yesterday.
Moreover, the NBR is facing legal and organisational challenges, such as difficult tax laws, limited authority and a lack of adequate manpower that the tax administration has to overcome, the study pointed out.
M Zakir Hossen Khan, research fellow of TIB who conducted and presented the study, suggested the NBR be an autonomous body so that it can take decisions on its own.
“Also the tax administration body needs legal and institutional reforms to make it a pragmatic organisation. The board also suffers from an acute manpower shortage that also needs to be addressed,” he said.
“At the same time, the NBR needs to take measures to control corruption and eliminate flaws in the tax collection system.”
The TIB spent two years for conducting the research involving 713 taxpayers from different professions. The organisation plans to discuss the research findings with different stakeholders and send its recommendations to the government.
Akbar Ali Khan, former adviser to a caretaker government, however, was skeptic about the findings and said the number of participants in the study was insignificant, while there are 23 lakh TIN (taxpayer's identification number) holders in the country.
“I do not agree with many of the findings, because the number of participants is small, and the report lacks a quantitative analysis too. As the tax administration body plays a huge role in economy, it needs a wide research to locate and find flaws and the way ahead.”
He also differed with the research proposal to make public the tax returns of political leaders, bureaucrats and government officials.
“It will violate taxpayers' privacy and will discourage people to give information to the NBR. It's a common global practice to keep the tax return information a secret.”
He stressed the need to reform the board and reduce the tax slabs to make the taxation system a taxpayer friendly one.
AB Mirza Azizul Islam, former finance adviser to a caretaker government, also said the research findings could be questioned for the small sample size.
“The researchers have taken a small sample size and compared the amount of tax evasion with Friedrich Schneider's Economics of the Hidden Economy, which often is not found as a flawless one,” he said.
“Whatever the methodological flaws, the problems identified in the research seem to be real and the government and the NBR have to address those and go for huge reforms.”
Badiur Rahman, former chairman of NBR, underscored the need of the government's willingness to formulate practical policies and implement those.
He also suggested the board take measures to increase the tax-GDP ratio of the country, which is the lowest among the South Asian countries.
M Hafizuddin Khan, chairman of the board of trustees of TIB, said the main objective of the presentation was to identify the problems of the sector and organise discussions with the stakeholders to find solutions.
He suggested the government simplify the tax return system to encourage people to pay taxes.
Farid Uddin, a member of NBR, said the study was 'one-sided'.
Iftekharuzzaman, executive director of TIB, also spoke.
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