The Revenue Sector Reform Committee has proposed transforming the National Board of Revenue (NBR) into a distinct division led by an officer of secretary rank.
The proposal includes splitting the functions of policy formulation and revenue collection into separate entities, with the NBR focusing solely on collection.
In an interim report submitted to Finance Adviser Dr Salehuddin Ahmed in late December, the committee, headed by former NBR chairman Dr Mohammad Abdul Mazid, suggested that a new entity, possibly named the Revenue Policy Commission, should be established to handle all revenue-related policies, including the preparation of the budget's finance bill.
Economists argue that boosting revenue collection is imperative and believe that separating policy-making from collection will streamline operations and reduce taxpayer harassment.
The reform committee stressed that the NBR should not have the authority to increase or decrease tariffs and taxes, which should fall under the purview of the new commission.
Initially, discussions revolved around assigning this policy-making power to the Internal Resources Division (IRD).
Since its establishment after independence, the NBR has been responsible for both policy-making and revenue collection, preparing the tariff and tax-related budget components presented in the national parliament.
However, the interim government formed in October had initiated the formation of a five-member advisory committee to recommend reforms for the NBR, which has now submitted its interim report.
Currently, the NBR operates under the IRD, with the IRD Secretary also serving as the NBR chairman.
The committee recommends that the NBR should operate as a separate division with a secretary-ranked official at its helm. The NBR chairman could be appointed from within its existing officials, focusing on collecting duties and taxes from the ground level.
Policy-making for income tax, VAT, and customs would transfer to the proposed Revenue Policy Commission, which would be led by another secretary-ranked official.
This commission would be staffed with experts in customs, VAT, and income tax.
Additionally, a permanent advisory council comprising representatives from the finance, commerce, and industry ministries, NBR, major business associations, and reputable research institutions would be established to provide policy advice at least four times a year.
Any policy formulated by the commission would require approval from this permanent committee.
It has been revealed that the commission would now handle the changes in tariffs and taxes traditionally managed by the NBR, implying that it will also prepare the finance bill.
Tribunals currently under the NBR handling tax and duty-related cases will also come under the commission’s jurisdiction, as the advisory committee believes that the authority collecting the revenue should not adjudicate disputes regarding it.
A member of the government-formed NBR reform committee stated that combining policy-making and collection functions could lead to biased decisions and taxpayer harassment, which is why the separation into two distinct bodies has been proposed.
The five-member advisory committee comprises former NBR officials, including two former chairmen, Mohammad Abdul Mazid and Nasiruddin Ahmed. The other members, former tax and customs officials, are Md Delwar Hossain (Tax), Farid Uddin (Customs), and Aminur Rahman (Tax).
This advisory committee is tasked with advising the government on reforms in revenue policy, administration, the institutional capacity of the NBR, modernization, governance structures, stakeholder engagement, and any related policy recommendations.
To prepare a comprehensive report, the committee is conducting ongoing discussions with various societal sectors, including businesses, economists, and general taxpayers.
The interim government, formed after the ousting of Sheikh Hasina's administration on 5 August following a student-led uprising, has initiated several reform activities, including the formation of the NBR reform advisory committee.
