Tax collection will increase by 5% of the country’s gross domestic product (GDP) if 100% e-filing is ensured, according to a study by the Centre for Policy Dialogue (CPD).
“This will increase tax collection by $5.8 billion in the first year and $7.8 billion in the fourth year, which is equivalent of Tk90,862 crore at current exchange rates,” CPD Distinguished Fellow Professor Mustafizur Rahman said while presenting the findings at a dialogue titled "Digitalisation of the Taxation System in Bangladesh: The Next Frontier" on Sunday (19 May).
“A dangerous co-dependency is developing due to not being able to increase domestic resource extraction,” he added.
He also commented that as a result, the entire Annual Development Programme (ADP) has to be implemented with loans.
“Entire revenue collection is being spent to meet the government's management and underdevelopment expenses. As a result, no revenue collection money can be spent on development,” he added.
“The government's 7th 5-Year Plan aimed to raise the revenue to GDP ratio to 14% by 2020, but the achievement was nowhere near it,” Dr Mustafizur Rahman said.
It will not be possible to achieve a tax collection target of more than 9% of GDP in the current financial year, he added.
“Even if 14% of the GDP can be collected as a tax, even at this time, the government will not have to borrow a penny to implement the budget,” the economist said.
Urging to increase the capacity of the National Board of Revenue (NBR) in tax collection, and increase the use of skilled manpower and technology, he said, “If other conditions remain unchanged, tax collection will increase to $167 billion by 2030 if 100% digital technology is used.”
“If the use of technology is not increased, the tax collection at that time will be a maximum of $90 billion. As such, the use of digital technology will help increase tax collection by about 86%,” he added.
CPD Executive Director Dr Fahmida Khatun said large investments are needed to sustain the ongoing development of the country.
“Although the demand for investment increases with economic growth, domestic resource circulation or tax collection does not increase in line with it. In the meantime, some pressure is coming from the external sector,” she said.
“After coming out of the list of least developed countries (LDCs), the interest rate on foreign loans will increase. Apart from that, a large amount of money is going away for repayment of existing loans and interest,” she further said, adding there is no alternative to domestic resource extraction.
Stating the problems in tax collection are very old and have already been identified, Dr Fahmida Khatun said, “NBR should be strengthened to modernise the tax system. The use of skilled manpower and technology should be increased.”
"People live in fear of coming into the tax net. This fear of taxpayers should be nullified by simplifying the tax collection system,” said Dr Fahmida Khatun.
The dialogue was organised with the support of the European Union (EU) at a hotel in the capital.
State Minister for Finance Waseqa Ayesha Khan, Parliamentary Standing Committee on Ministry of Posts, Telecommunications & Information Technology Chairman Kazi Nabil Ahmed, National Board of Revenue (NBR) Chairman Abu Hena Md Rahmatul Muneem and CPD Distinguished Fellow Dr Debapriya Bhattacharya also spoke at the event.