Aiming at mobilising more finances to support development programmes through internal resources, the National Board of Revenue (NBR) is going to bring flat owners in the cities and towns and affluent people at upazilas and villages under tax net and for this it will conduct a survey in the next six months.
The tax authority has been shouldering the toughest task of financing the budget for implementing the mammoth development activities to achieve the government’s target of attaining sustainable development goals (SDGs) in line with its seventh five-year plan as well as fulfilling the target for graduating to developing country by 2024. For this, resource mobilisation is much essential.
Mosharraf Hossain Bhuiyan, Senior Secretary, IRD and Chairman of NBR said this at a CPD Dialogue on Catalysing Development Finance for Bangladesh: Mobilisation and Utilisation Challenges organised by Centre for Policy Dialogue (CPD) at Khazana Gardenia Banquet Hall at Gulshan in Dhaka on Thursday.
Dr A B Mirza Azizul Islam, former advisor to the caretaker government attended the programme as Guests of Honour.
Ragnar Gudmundsson, resident representative, International Monetary Fund (IMF) and Barrister Nihad Kabir, president, Metropolitan Chamber of Commerce and Industry (MCCI) comments as Distinguished Discussants.
Dr Fahmida Khatun, executive director and Towfiqul Islam Khan, senior research fellow of CPD made keynote presentations at the dialogue. Professor Mustafizur Rahman, Distinguished Fellow, CPD chaired the session. Dr Debapriya Bhattarcharje, Distinguished Fellow, CPD, was also present.
In the paper on ‘Can Bangladesh do without foreign aid?’, Dr Fahmida Khatun mentioned that Bangladesh is passing through the period of double graduation – as in 2015, it has achieved the status of lower middle income by raising per capita income and in 2018 has entered the process of graduating from least developed country (LDC) to a developing country by 2024 with fulfilling three criteria – per capita income, human assets, and economic vulnerability.
Bangladesh needs to deal with several challenges as it moves forward to make its growth sustainable and one of the major challenges is mobilisation of finances from external resources, she mentioned adding, “Once graduated, terms of foreign aid or official development assistance (ODA) will change and external resources will be costly as the grant element may not be widely available which will put pressure on debt servicing.”
Highlighting that ODA in ration of GDP has gradually decreased in the recent past, she said the need for ODA in development activities of Bangladesh is still significant and it will be more essential as the government is committed to implement SDGs. In view of this, enhancing the efficiency of aid utilization will become more important in the coming days, she said suggesting for pragmatic steps in capacity building in aid utilisation as well as collecting more internal resources.
Mentioning that Bangladesh’s dependence of foreign aid has significantly declined over the years, she said with the recent trends it has been established that aid is no more a significant determinant of economic growth of the country.
In his paper titled ‘Potential of personal income tax in Bangladesh,’ Towfiqul Islam Khan said, ‘Revenue mobilisation has become pertinent more than ever in the backdrop of the country’s promotion to the LMIC status, need for financing the SDGs and Bangladesh’s impending graduation from the LDC category in the following decade.
Bangladesh targets raising tax-GDP ratio to 14.1 percent and revenue-GDP ratio to 16.1 percent by 2020 with growing significance of income tax collection as per the 7FYP, he mentioned. The present levels is lower than the average 15 percent mark for the developing countries, he added.
Income tax as percentage of GDP is expected to rise to 5.4 percent in FY20 according to 7FYP and 38.3 percent of total government tax revenue is expected to come from income tax, he figured out quoting data of the Ministry of Finance, adding personal income tax collection is not only critical for mobilising government revenue, but is essential for establishing a more equitable economy.
In this backdrop, it is essential for Bangladesh to gauge the depth of its actual revenue potential from personal income tax, formulate suitable policies to extract the most from this untapped resource pool and develop adequate capacity considering the geographic aspects of revenue mobilisation, he further said.
The pace of identifying new taxpayers appears to be slowing down and collection from the newly-identified taxpayers also exhibit the similar trend, said the researcher adding that the number of individual taxpayers has grown steadily during last couple of financial years.