Bangladesh's escalating debt crisis stems from a chronic shortfall in tax revenue, National Board of Revenue (NBR) Chairman Mohammad Abdur Rahman Khan has cautioned, highlighting that the country’s revenue-to-GDP ratio remains among the lowest globally.
Speaking at an event hosted by the Chattogram Tax Lawyers’ Association at GEC Convention Centre on Wednesday (12 February) night, he stressed that the revenue deficit is widening, forcing increased borrowing, which future generations will have to bear.
“Our revenue-to-GDP ratio stands at a mere 7.1%, one of the lowest in the world. In 1972, 90% of our budget was in deficit, and we are yet to overcome that situation. To reduce debt pressure, we must enhance revenue collection,” he remarked.
The NBR chairman further underscored that the proportion of revenue generated from income tax serves as a measure of a nation’s progress.
“A country’s level of civility can be gauged by the share of its tax revenue that comes from income tax. By this measure, we are far from being a civilised nation. Instead, we often find it easier to collect indirect taxes from the poor—when a labourer buys a simple towel to wipe his sweat, he unknowingly pays tax on it,” he said, advocating for higher direct tax collection.
Highlighting the need for legislative reforms, Khan pointed out that the misuse of tax, VAT, and customs laws hampers revenue collection.
“Our tax administration and tax policy must operate under separate leaderships. The revenue we manage to collect is almost equal to the losses incurred due to inefficiencies,” he stated.
Despite significant growth in registered taxpayers—from 21-22 lakh to over 1.11 crore in the past decade—compliance remains a major issue, as 70% of these registered taxpayers do not submit returns.
He attributed this to a lack of proper guidance from tax lawyers and inadequate monitoring by NBR officials.
“Many tax inspectors fail to visit taxpayers’ homes, conduct supervision, or even examine bank accounts to assess undeclared wealth,” he added.
