Collectors' behaviour keeps people from paying taxes

NBR chairman tells CPD dialogue


FE Report | Published: November 09, 2018 09:57:34 | Updated: November 10, 2018 10:05:11


NBR chairman Mosharraf Hossain Bhuiyan addressing a dialogue organised by CPD at a city hotel on Thursday — FE photo

Speakers at a dialogue on Thursday underscored the need for mobilising increased domestic resources and proper utilisation of foreign aid for development financing.

They said though Bangladesh attained a significant economic growth in the last several years, it is yet to secure a good position to finance development activities on its own.

The views came at the dialogue titled 'Catalysing Development Finance for Bangladesh: Mobilisation and Utilisation Challenges' held at a city hotel.

The Centre for Policy Dialogue (CPD), a local think-tank, organised the dialogue.

CPD distinguished fellow Prof Mustafizur Rahman chaired the session.

CPD executive director Dr Fahmida Khatun presented a keynote paper titled 'Can Bangladesh do without foreign aid?", and CPD senior research fellow Towfiqul Islam Khan presented a survey report on the 'Potential of personal income tax in Bangladesh.'

Speaking as the chief guest, chairman of the National Board of Revenue (NBR) Mosharraf Hossain Bhuiyan said the country's Gross Domestic Product (GDP) growth averaged around 7.0 per cent in the last 10 years while that of the previous decade was around 5.5 per cent.

He said economic growth expanded, thanks to increased consumption alongside public and private sector investments.

"Both foreign aid and domestic resource mobilisation are important for our economic development," Mr Bhuiyan said.

He said the least-developed countries have rights on foreign aid. "It is globally recognised that developed countries should channel at least 0.7 per cent of their GDP to the development of developing countries."

He underscored the need for effective use of foreign aid for the economic development.

Mr Bhuiyan said if large projects like metro-rail and Padma Bridge were implemented with funding from development partners, the quality of construction would have been better and accountability ensured.

Underscoring the need for mobilising domestic resources, he said the tax-GDP ratio in Bangladesh is low.

The NBR chairman said common people do not show interest in paying taxes because of the treatment they receive from tax lawyers and tax collectors. "We are trying to address this problem."

He said presently some 3.5 million people are holders of taxpayers' identification number (TIN), but fewer than 2.0 million submit tax return. "It is important to expand the tax net and the number of return submission." Mr Bhuiyan said that the NBR would soon conduct a survey on checking whether people living in urban apartments cities pay taxes or not. The work will be completed in the next six months aiming to bring more people under tax net, he added.

He said Bangladesh's tax-GDP ratio is low-around 10 per cent. "If we can raise it to 12 per cent that will be a big achievement," he added.

Former adviser to a caretaker government A B Mirza Azizul Islam said statistics show that investment is not increasing in the country but the economy is growing. He questioned how it is happening.

He said the labour force survey also finds employment growth is not happening. "Are we heading towards both labour-less and capital-less growth? It needs explanation," he said.

Referring to his own research, Mr Islam said investment is an important determinant of growth, except for a few countries like Cambodia whose investment is less than growth rate.

In Bangladesh, he said the private sector investment has remained almost stagnant during the last one decade.

It was 21.9 per cent in 2009, which reached 23.1 per cent in 2017. "We see only 1.2 per cent increase in a decade" he said.

He said during the period, major investment came from the public sector where the contribution of foreign aid was significant.

Mr Islam said the proportion of aid for Bangladesh, as the economic condition of the country is changing, has started declining and in the future will further go down. "So, we need to enhance domestic resource mobilisation."

He said Bangladesh's tax-GDP ratio is the lowest in the Asia-Pacific region. "Even in Nepal, which is still a least developed country, whose per capita income is much lower than Bangladesh, people pay higher revenue than ours," he added.

CPD distinguished fellow Debapriya Bhattacharya said it is not true that Bangladesh would be able to ensure proper development without foreign aid.

The adequate resources Bangladesh needs for required investment are not coming from the internal source, he said.

Mr Bhattacharya said the tax-GDP ratio in Bangladesh is around 10 per cent, which is lowest in this region, even lower if compared globally. "Bangladesh needs foreign aid in the future. But the foreign aid flow is decreasing and Bangladesh will have to show innovative capacity like taking blended financing," he noted.

He said Bangladesh is ill-prepared to finance large projects like Padma bridge from own resources, because, "if we transfer limited resources from one place to another, a vacuum of resource will automatically be created."

"The spending in education and health remains stalled at one place because we are making Padma Bridge from own pocket," he added.

Mr Bhattacharya said from the recent household survey it was noticed that Bangladesh was gradually turning into an unequal society. "The growth rate is increasing, per capita income is rising, but disparity is also widening."

He said the inequality in wealth is much higher than that of income. "Is it happening that we cannot see some income that is turning into wealth? Is this real time to bring more wealth under the purview of income tax?"

"If we cannot impose tax on wealth at increased rates, there will be no solution to the present inequality scenario. There is no scope for mitigating the inequality only through realising income tax," he added.

"How can one expect that the NBR chairman will ensure governance in his arena when the entire country lacks good governance? Mr Bhattacharya questioned.

"When indemnity prevails in the country, when justice remains absent as a whole, how can we expect to get fairness in tax payment?" he asked.

"If any taxpayer feels that he can avoid paying tax easily, why will he pay? The tax system has to be linked with the overall good governance of the country," he added.

Among others, resident representative of the International Monetary Fund (IMF) in Bangladesh Ragnar Gudmundsson, president of the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) Nihad Kabir, and chief executive officer of Bangladesh Foreign Trade Institute (BFTI) Ali Ahmed spoke at the dialogue.

syful-islam@outlook.com

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