Paying taxes and full citizenship

Donors, unconvinced that the GoB can or will carry out policy that is in the national interest, attach conditions to their support with the intention to realise what they consider is in the national, or perhaps "human" interest. But donors and the GoB do not always see eye-to-eye, and the national interest is a domain of constant ideological conflict and contestation.

"As it should be!" says the advocate of liberal democracy. Conflict and contestation will generate an important dialogue, required for rationale in decision-making, as well as compromise, consensus and legitimate policy formulation.

But where is the voice of the citizen in this dialogue? As the CPD suggested, should not the dialogue be held between the citizens and their government, rather than between state and donor? What is the point of democracy if citizens do not voice their demands? Surely, in a democracy, the national interest is synonymous with the citizens' interests, and citizens should ideally want to be part of this dialogue.

So why don't citizens simply take charge, organise, and participate more actively in policy formulation? There are scores of them in Dhaka city alone -- they are the middle and upper classes. They are literate, capable, and opinionated. Why do they not seek representation, and hold their government to account? After all, it is also "their government" -- it says so in the constitution. They would perhaps be motivated to make a difference, when their hard-earned incomes were taxed to pay for bad roads, schools without resources, and hospitals without proper access -- not to mention (in)security.

That's how it should work, or at least, that's how democracy works in the West, where taxpayers as an interest group, play a central role in state-society interaction. Important to note here is that citizens in the West do in fact contribute a significant proportion of their income for public goods and services. In the OECD, taxation constitutes some 35 per cent of national income on average (compared to 8-10 per cent for Bangladesh).

More importantly, everyone who takes a salary is obliged to contribute a significant part of it, thereby constituting a common interest among taxpayers. The common interest generates a certain public awareness, which in turn provides relevance and context to public policy debate. What should the government do with our money? What can we expect in return for our taxes?

While CPD emphasised the need to raise revenue to gain further independence in policy formulation, there are other obvious benefits from raising taxes. To fight institutionalised corruption (and political bias in the civil service), salaries of public servants must be raised significantly because if an official cannot secure the future of himself and his dependants by his salary, he must seek further income one way or another.

Securing one's own livelihood is a moral obligation that transcends any belief or norms system. To attract the most competent of professionals, desperately needed and contractually obliged to serve a citizenry in need, salaries must be brought in line with market rates -- anything less will act as a standing invitation to inefficiency, rent seeking, and political bias.

More revenue is also needed to finance nationwide infrastructure projects such as water delivery, roads, electricity, and communication, without which economic growth and social development cannot realistically be expected to take place.

Aside from these obvious benefits, which can heal the crippled bureaucracy to become a true agent of development (for which purpose it was intended), there is a deeper meaning to argument for taxation -- which I believe lies at the heart of the concept of modern citizenship. A closer inspection of the governance/citizenship model reveals that there is certain monetary dimension to citizenship which is rarely discussed and which requires illumination.

We can approach this issue by posing the following questions: Does a person really have rights if no organisation actually protects them? How can rights be said to exist without a source of funding, perpetuating the existence and protection of those rights? How will an untrained, uncoordinated, corrupt, politically biased and most importantly under funded organisation such as the police, juridical or civil service guarantee my rights to property, justice, education, opportunity, health, dignity, and life? (Again, I stress the issue of funding because any attempt at reform will be undermined unless public servants can secure their livelihood without having to diversify their sources of income by illegal means.)

For readers concerned with reality as opposed to theory, your answer will likely be negative. The reality of the modern state system suggests that citizens must pay for their rights to be upheld by the state, obliged, as they are, by constitutional law -- the modern social contract. By law this obligation falls upon all, whether rich or poor, and by law, contractual obligation falls upon the state to protect citizens' rights, whether rich or poor.

This discussion necessarily implies that a law/rights based culture is linked to taxation. I believe this is true in because a) taxes enable the state with the capacity to deliver constitutional entitlements, and b) imposing taxes generates common interests among citizens, enabling them to think and act collectively, and c) taxes generate a certain awareness of the social contract, enabling tax-payers to think and act as citizens, rather than subjects of the state. The act of paying tax brings the citizen-to-state relationship a step closer towards the formal realm, and sets the stage for state accountability, in the legal contractual sense.

But how can low-income citizen be expected to carry the burden of taxation? Is it moral to impose taxes on them? In tackling these questions we should bear in mind that the poor already pay taxes on consumption (VAT), from a moralistic standpoint the least desirable with regards to the poor. While consumption tax is relatively easy to collect and therefore widely collected, it is a regressive tax, meaning that the lower one's income, the higher one's tax burden.

It is also the least desirable tax with regards to the poor, because it is "hidden" as few people in Bangladesh seem aware of paying VAT on a multitude of goods. Consumption tax does not bring about awareness because it is hidden, informal, and without receipt. As such it does not carry the quality as an act of citizen contribution to the state or community.

The poor and low-income citizens would be better off paying taxes on their income, rather than on their consumption. Substituting regressive consumption tax for progressive income tax would not only be more equitable (and moral), but it would benefit society in that it would generate awareness of the common interest and people's role as citizens. Rather than debating the question of whether the poor can or should pay taxes, we can make the question bigger: Can the poor afford to remain subjects, as opposed to citizens?

In the status quo, the government as an agent of development, remains crippled without sufficient revenue required to deliver constitutional entitlements, and rights exist only for first-class citizens. Society remains without a culture of citizenship, unable to internalise the social contract, and unable to think and act as a community, largely unaware of rights and obligations vis-a-vis community and nation.

Taxation, the necessary evil, is a crucial element in the citizenship equation with far reaching political/economic consequences for the state and society. And while taxation alone will not solve the problem of this country's political economy, it will, at the minimum, raise the government capacity to live up to the social contract. Most importantly, it will motivate citizens to think as a community, to demand reforms that are in the interest of tax-paying citizens.

Jens Stanislawski is a Ph.D candidate at the University of Bath.