Automating the country's tax collection system is an old issue. It is now really difficult to recall when people started talking about the need to do it to help reduce corruption and mistrust and ensure transparency.
Multilateral donors like the World Bank WB) had suggested digitization of the tax system over two decades back.
The irony is that experts here are still discussing the issue and urging the authorities concerned to expedite the automation process. Accounting and tax experts speaking at a webinar held Tuesday last lamented the delay in automation and expressed the hope that the National Board of Revenue (NBR) would expedite its automation activities.
How far all these pleas would work on the revenue board is difficult to say. Its past track record does not make one that hopeful about any notable improvement within a short time.
The WB has always advised the government to reform its tax machinery to help boost its tax laws and the system of collecting tax revenues. The Bank did not stop there. It had financed a major VAT (value added tax) automation project worth nearly Tk.7.0 billion. The pace of implementation of this important project has proved that the NBR is not that serious about the digitization of its three wings---Customs, VAT and Income Tax.
The deadline for completing a project, which was launched in 2014, got extension thrice because of the poor rate of execution. The final extension ended on June 30 last year. Yet over Tk.3.0 billion of the project remained unspent. The COVID-19 pandemic is cited as a major reason for the execution delays, but that excuse hardly holds water.
Online tax payment is yet another important issue as far as making the life of taxpayers hassle-free. Though tall claims are being made about facilitating online tax payment, the reality is that the process is still cumbersome and not user-friendly. Taxmen, however, would say otherwise.
A news item published in this paper last Tuesday disclosed that tax return submission by individual taxpayers has gone up more than threefold. The NBR received 330,000 tax returns in the last three months compared to 100,000 submitted during the corresponding period last year. What has prompted so many people to be tax compliant suddenly?
The rush, if you prefer to call it so, is not at all voluntary. Some amount of coercion has played a key role. The government has made the production of tax return receipts mandatory while seeking 38 types of services from government and private entities.
But submission of many tax returns may not translate into higher tax revenues. When the government also made e-TIN submission mandatory while availing of certain services, many people could manage the same and stay away from submitting tax returns annually. It remains to be seen whether the holders of tax receipts paid tax or submitted zero-tax returns. The possibility of the latter group dominating the scene is more because many people having taxable income are not willing to pay tax and there are some unscrupulous tax officials always ready to help them.
Since a record number of people are expected to submit tax returns this year, the NBR top notches might also be interested in knowing the number of returns submitted online.