Tax amnesty
In a seminar held at the National Press Club on 19 August 2007, NBR Chairman Mr. Badiur Rahman told (as reported by Prothom Alo of 20.8.07) that our GDP-Tax ratio was lower than that of Nepal. This year it has been fixed at 10.8% while Nepal's is fixed at 14%. He maintained that if we could raise this ratio, then we could dismantle ERD, only IRD would suffice and we could dispense with foreign aid. He further said that no self respecting person would like to work in the ERD swallowing the insult and harsh conditions of donors. Therefore, there is no substitute of taxation. "We have a tax evasion culture. And the NBR couldn't adequately discharge the responsibilities of motivating the tax payer," he said. He also acknowledged that there were yet some complaints of harassment of taxpayers, while they should be respected. Good results cannot be achieved by harassment; it has to be achieved by showing respect and love for them, he stated. Commenting on tax reforms, he opined. "Collecting tax by coercive means isn't reform. Reform means devising a system whereby people would pay tax being self-motivated."
Dr. Kazi Kholiquzzaman said, "Our people become happy if they have to pay no tax. This attitude has to be changed." Professor Abul Barakat revealed that there were Tk two lakh crore of undeclared money and if this amount could be made legal, Tk 60,000 crore of tax could be collected. This amount is more than the country's total revenue income and is enough to dispense with foreign aid, he said.
Previously, by saying that only death and income tax payment were inescapable, Adviser for Finance and Commerce Mirza Azizul Islam put so much emphasis on tax payment that no other Adviser/Minister ever did. Given this commitment and endeavour of the present government, revenue collection would definitely improve, but something unusual must be done to dramatically augment income tax payment by individuals who are mostly very modest earners, devoid of any capacity to save for rainy days. Had there been an adequate social security system in place and prudent govt. spending, people wouldn't have been so tax averse as we see today. It is not proper to say that our people enjoy tax evasion. All and sundry (including the poorest of the poor) regularly pay taxes in different shapes without any grudge. It is easy to pay. But income tax is neither easy to calculate, nor easy to defend.
Therefore, the oft-repeated harassment is a reality in Bangladesh.
The present drive is wrought with this evil. Hence the number of taxpayers is destined not to rise appreciably. Apart from traditional reasons, the present situation is also responsible for this. Presently, the legally earned income which wasn't declared is called black money and this may be made white within 30 September 2007 by declaring it and paying usual taxes plus 5% fine on it. But the calculation of the money remaining undeclared for years is neither easy nor, in most cases, encouraging to pay tax on it.
The fast rising inflation (the maddening rise in cost of living) is a definite deterrent for modest income earners to pay even a few thousand taka of tax now. So it would be futile at the moment to ask for taxes on undeclared income of those who cannot make a decent living these days.
It would therefore be wise to bring all or as many eligible taxpayers as possible into the tax net by declaring tax amnesty for all who would submit tax returns by a given date, say 30 Sept. 2007. Only then the talk of Tk 60,000 crore of tax collection, harassment free tax payment environment, dispensing with foreign aid and the ERD, getting rid of the insulting conditions of donors, etc. would be meaningful.
It is always better to avoid being penny wise, pound foolish.
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