Netting the tax evaders

Compared to that of the previous years, the progress made in netting additional number of individual taxpayers this year is laudable. Nearly 200,000 new taxpayers submitted tax returns within the deadline bringing the total number of return-filing individual taxpayers to 1.7 million. The National Board of Revenue (NBR) has also collected 27 per cent more in income tax this year over that of the last assessment year. The progress though looks impressive is far too short of the figure -- at least 10 million taxpayers -- that the finance minister considers befitting for a nation of 160 million. 

It would take at least 40 years more to hit the figure that the finance minister wants to see. But by that time the population will be twice the current size with the number of potential taxpayers going up substantially. In such a situation, the target will continue to elude the taxmen unless they do something different. The performance of tax officials has, no doubt, improved than before and that is reflected in the overall revenue collection. But that is not enough given the economy's potential, in terms of tax revenue generation.

Taxmen, it seems, are after easy targets---the salaried persons. A report published in this paper quoting a high official at the NBR said around 60 per cent of tax returns, submitted this year, belong to salaried persons. Self-employed people dominate the rest. The businessmen are the ones who generally avoid submission of tax returns. The recent increase in income tax revenue generation has been mainly due to the tax return submission by greater number of salaried people, including the government servants.

Tax officials find the businesspeople difficult to trace. It might be true in the case of a few who do not have permanent offices or shops. But there are innumerable businessmen owning shops and other establishments who avoid tax payment either deliberately or for fear of harassment by tax officials.

Motivation does also play a big role in payment of tax in a country like Bangladesh. Salaried people who are educated in most cases do feel an obligation as far as tax payment is concerned. Besides, their employers either deduct tax at source or ask the employees to pay taxes on their own. Most owners of small, micro and floating businesses do not feel that much obligation to pay their income tax. They have not been motivated adequately to pay taxes. Rather, they have developed a sort of taxmen-phobia because of the absence of a relaxed environment and friendly approach on the part of the tax officials.

Inadequate automation is yet another weakness that is hurting the performance of the taxmen as far as brining in an increased number of people under the tax net. There were lots of hullabaloos over automation of tax administration. But the situation has not improved much on the ground. The reason is not that difficult to understand. Some people are not willing to see transparency in tax administration that automation can ensure.

The per capita income has been rising unabatedly in the country. The size of the middleclass too is becoming bigger constantly. These positive developments do need to be reflected sufficiently in the annual income tax collection. It is the duty of every citizen with taxable income to pay tax to the state. But the tax men, on their part, should also employ extra efforts to motivate people for paying taxes, of course, in right amounts.