Md. Joynal Abdin
The Independent on 04 December 2018
Taxation is considered as the principal source of government earnings, revenue is considered as the fuel of government machineries. In other word it could be said that, government earns through taxation and spend it to provide multidimensional services like security, social safety, health care, road, bridges, transport, education so on and so forth services. Therefore government usually emphasis on enlarging the tax coverage and tax providers net. Acts were enacted to provide adequate legal power to the tax collectors so that, they can meet up targeted revenue collection. This enormous power sometimes drives tax collectors into illegal exercise of state power to achieve personal benefits. Therefore tax collectors are the richest, powerful and wealthiest segment of the society throughout the history.
In modern system of governance, tax system is important because it provides governments with reliable and sustainable means of revenue collection; reduces dependency on foreign aid, increase financial autonomy; enables government to provide various cash support to deserving citizens; encourages good governance, accountability, and transparency; helps formalize the economy and promote economic growth etc. It is government’s rights to collect taxes, but at the same time government must remember that, it is tax payer’s right to know how efficiently government is spending their money for the welfare of the entire nation. It is also a tax payer’s right to pay the tax without hassle or nay sorts of anxiety.
In Bangladesh government is targeting increased amount of revenues every year but number of tax payers are not increasing with a same pace. Therefore existing tax payers mainly the institutional / corporate tax payers are pressing by the collectors and reach to the target at any cost. Many businesses complain that, customs authority is evaluating their imported raw materials in an unknown rate. In this age of digitalization each products duty rate should be Cristal clear to the importer without any confusion. Excessive power made the tax collecting authorities unquestionable; otherwise one cannot do business in this country. Ambiguous evaluation method or evaluation rate creates panic or fear among the businesses and creates an environment to offer bribe to the concerned officials to get rid of this problematic situation.
On the other hand tax officials complain that, businesses are always tries to get customs weaver. Cash incentives types of incentives were abused in mass scale by the private sector. But I am confident that, any sort of abuse is impossible without cooperation from tax collectors. Therefore let’s do not blame each others. But recognize our shortfalls and ill motive of a portion. Let’s find out ways forward to enact and implement a welfare taxation regime in cooperation with collectors and payers for betterment of this land. Let’s remember that, every citizen of this country have a portion of ownership of this state. Not the tax collectors, not the policy makers, not the tax payers are the owners of this country alone. It’s a joint ownership, neither the government alone nor the remaining citizens.
Let’s look after another debate that, increased amount of taxes will facilitate developed services from the government, transparency of public expenditure, and good governance and vice a versa. Debate can go long in favor and opposition of this statement. But we have to ends up into a point that, whatever the collection amount, in should be in a transparent and mutually satisfied manner. But within the boundaries of legal framework to satisfy needs of the nation but not for the collectors and payers illegal benefits only. Every citizen including me of this country has a serious fear about the tax calculation, tax fixation, tax collection and the tax collectors. Because of it is one of the easiest weapons to send someone into the prison without showing any major crime. Therefore it is government and the taxation authority’s duty to simplify the processes and remove this fear of the mass people to increase tax net and tax collection.
We can look into the tax regime from another eye i.e. weave of international free market economy vs. reduction of customs duty. Duty free and quota free market access to the developed markets is one of the loudest slogans of Bangladesh in side WTO and all other regional trade agreement negotiation platforms. But what will be our position after the year 2024 i.e. Bangladesh’s graduation from the list of LDC countries. Other LDC countries even any counterparts may ask Bangladesh to provide duty free access to their products into Bangladesh. Not to cater the wanting of counterparts, but Bangladesh have to sign a significant number of Free Trade Agreements (FTA) with its major trade partners for sustaining our exports to those markets. But we must have to offer few tax benefits to their products into Bangladesh too. What will be its impact on our revenue collection?
All business sectors wants tax benefits like tax exemption, tax weaver, and tax holidays to the respective sectors as a protection against foreign imports or make them competitive in local or export market. Tax collectors thoughts that tax weaver is reducing their scope and making their target achievement difficult. But we have to analyze its spillover effects like larger manufacturing will increase chances to collect increased amount of VAT, a tax weaved sector may boom up employment and increase number of tax payers in the form of income tax. Increased industrialization may consume increase amount of electricity, gas and other utilities and pay more taxes in other forms. Therefore it is not mandatory for the tax authority to refuse all sorts of tax weaver and tax holidays proposals.
Similarly, tax collectors always have a trend to oppose proposals to reduce Corporate Tax Rate or Income Tax Rate, but they are unable to recognize that, total amount of tax weaved fund will not be used in consumption. Rather it will be reinvested in the economy and will increase employment opportunity, GDP growth, export earnings or import substitution. Thus it will increase chances of getting revenue in other forms like income tax, VAT. At the same time reduced corporate tax rate or income tax rate could inspire excluded tax payers to be enlisted into tax net. Therefore academic research is needed to assess impact of corporate tax rate reduction on Bangladesh economy. Corporate tax rate reduction could be a boosting initiative to the economic development of Bangladesh.
Finally we can state that, a fearless, transparent, reasonable and justified tax regime has a direct positive impact on the economic development of a country like Bangladesh. But tax collectors have to remember that, they are not the owner of the country and tax payers are not their peasants. They are two parts of the same coin and contributing into each other’s legal wellbeing.