Breakthrough in tax collection unlikely without automation

The National Board of Revenue (NBR) is unlikely to make any major breakthrough in tax collection without automation and reforms in the revenue administration, said its former chairman Nasiruddin Ahmed. 

"The whole tax administration suffers from problems. A lot of reforms are required along with full automation of the tax system and there should be no compromise," he said in an interview recently.

His observations came as the NBR crossed Tk 300,000 crore mark in revenue collection for the first time in the fiscal year of 2021-22.

In the year, the tax collector posted a 15 per cent year-on-year growth but missed its target by nearly Tk 30,000 crore. This was the tenth year in a row the NBR failed to attain the target set by the government.

Ahmed, who headed the NBR for three years until 2012, calls the crossing of the Tk 300,000-crore collection mark commendable amid challenges.

"But it is not something to celebrate because the collection is behind the target and Bangladesh's tax-GDP ratio is still one of the lowest in the world," he said.

Revenue generation has remained at a lower-than-expected level as the latest value-added tax (VAT) law, which became effective in July 2019, has not been able to bring in desired results in indirect tax collection.

Several years have also passed since the initiative to introduce a new income tax law was taken.

"The laws should be framed. The tax administration should be overhauled and officials should be tasked based on functional lines," Ahmed said.

Another major problem facing the NBR is the question of the integrity of revenue officials.

"Tax officials should not compromise when it comes to the issue of revenue collection. Tax should be collected by giving services to taxpayers," Ahmed said.

The former bureaucrat thinks policy-making should be separated from implementation since it creates a conflict of interest when the same organisation draws up a policy and executes it.

"India has already separated its policy-making from implementation. So, policy-framing in Bangladesh and the administration should be separated gradually," said Ahmed, adding that the finance ministry is supposed to formulate the policy.

He suggested the NBR high-ups sit with former NBR officials to discuss ways of giving a much-needed boost to revenue generation.