Tax compliance won't improve without transparency in expenditure: Experts

Tax compliance in Bangladesh will remain weak unless taxpayers can clearly see how their money is being spent, economists and business leaders said on Wednesday, highlighting transparency and fairness as key challenges in revenue administration.

They made the remarks at a seminar held at the BDBL building in the capital, where speakers said a lack of accountability in tax expenditure has eroded public trust and discouraged voluntary compliance.

The seminar, titled "Revenue Challenges and Solutions in Implementing the Commitments of the Post-Election Political Government", was jointly organised by Voice for Reforms and the Bangladesh Research Analysis and Information Network (BRAIN).

Dhaka University Professor Rashed Al Mahmud Titumir said taxpayers are reluctant to comply because they do not see any tangible benefits from the taxes they pay.

"As long as people cannot see where the money collected from them is being spent, tax compliance will not develop," he said, adding that confidence in the revenue system has weakened due to the absence of transparency and fairness.

Taxpayers, he noted, want assurance that their contributions are being used for public benefit.

Masud Khan, chairman of Unilever Consumer Care, echoed similar concerns, questioning what taxpayers receive in return for their payments.

"In many countries, taxpayers enjoy a wide range of services free of cost," he said, adding that visible public services could significantly improve willingness to pay taxes.

He pointed out that only about 20 per cent of tax-eligible individuals in Bangladesh currently pay income tax, placing the burden on a small group of compliant taxpayers.

Fahim Mashroor, head of Voice for Reforms, moderated the programme, while Jyoti Rahman presented the keynote paper.

Speakers said corruption and mismanagement under previous governments had resulted in large-scale wastage of public funds, further weakening public confidence in the tax system.

They criticised the National Board of Revenue's (NBR) practice of collecting minimum tax, arguing that it undermines tax fairness. Bangladesh, they said, is unusual in enforcing such a system. Minimum tax is collected at a fixed rate at source and is not refunded even when companies earn lower profits or incur losses.

Speakers argued that taxation should be income-based and that companies should not be taxed in the absence of income.

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