Editorial
Tax evasion culture
Procedure and approach need reform
THE very low Tax-Gross Domestic Product (GDP) ratio at around 9 per cent coupled with the people's tendency to evade paying tax has been a major hurdle before the revenue administration's effort to fulfil the government's revenue collection target every year. As a result, the amount of revenue collected annually is too low compared to the population's actual potential to pay taxes. Small wonder the government has to meet the budgetary gap through borrowing from banks and foreign aid.
A recently conducted study by the Transparency International, Bangladesh (TI, B) reveals that the government has been deprived of Tk 210 billion in terms of revenue due to a number of factors that include corruption among tax officials, high rate of indirect taxes, people's tax evasion habit arising from complicated procedures, flaws in the tax collection system and so on.
But of no less importance is the collusion between the corrupt tax officials and taxpayers. While shortage of manpower exacerbates the problem further.
It cannot be gainsaid that structural flaws combined with manmade factors militate against effective spreading of tax network as well as revenue targets. . Such a state of affairs calls reform in the tax administration that should include overhauling tax laws, procedure of tax collection and submission of tax returns. And of equal importance is effecting a change in the public's attitude towards paying taxes. But the public's apathy to pay tax is rooted in their psyche--the fear of being harassed and unjustly fleeced by tax officials. And to a large measure, that fear is also not without its basis. Still worse is that a section of corrupt tax officials that resorts to underhand dealings with clients at the expense of the state
exchequer.
A cleaner and efficient tax administration is a big boost to the public's confidence in the system. A simplified but electronic tax collection and submission of returns will further ease, expedite as well as improve quantity and quality of the revenue collection system. It is hoped
that the government would take serious note of these suggestions.
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