After many years, Bangladesh’s 13th Parliamentary Election has injected a rare festive mood into public life. Political parties have unveiled their manifestos with unusual care, and voters appear genuinely engaged, scrutinising promises rather than merely consuming slogans.
Among the lofty pledges on social spending, one commitment stands out for both its ambition and ubiquity: raising the tax-to-GDP ratio.
Almost every major party has set a numerical target, ranging from 12 percent to 15 percent. This is no small feat in a country whose tax effort has long been one of its gravest structural weaknesses.
LOFTY PLEDGES
At 6.8 percent, Bangladesh’s tax-to-GDP ratio ranks among the world’s lowest, well below that of peer economies.
The Bangladesh Nationalist Party (BNP) pledges to raise it to 15 percent by 2035; Bangladesh Jamaat-e-Islami proposes 14 percent, without specifying a timeline; the National Citizen Party (NCP) commits to 12 percent within five years; and Islami Andolon Bangladesh sets a target range of 14-15 percent.
These pronouncements arrive just as the National Board of Revenue (NBR) has formulated its own ten-year strategy, aiming for 10.5 percent by fiscal year 2034-35 under its new 10-year plan integrated into the Medium- and Long-Term Revenue strategy.
The plan seeks to bolster domestic resource mobilisation, strengthen fiscal foundations and support sustainable growth, while also preparing Bangladesh for graduation from the list of least-developed countries (LDCs) and helping meet its Sustainable Development Goals by 2030.
The revenue board’s strategy comes amid pressure from the International Monetary Fund (IMF), reflecting conditions attached to the multilateral lender’s ongoing $4.7 billion loan programme.
NEEDS “SERIOUS WORK”
According to Md Deen Islam, research director at Research and Policy Integration for Development (RAPID), the NBR’s 10.5 percent target is “actually quite conservative”.
“Even without raising tax or VAT rates, simply controlling tax evasion could push the tax-to-GDP ratio to 12-13 percent,” he argues.
Achieving 15 percent or more within the next decade, however, would be extremely challenging without strong and sustained commitment to reform.
“What political parties are saying is technically possible,” Islam observes, “but it would require serious work.”
The key, according to him, lies in strengthening the NBR’s capacity, particularly through accelerated automation.
“Going beyond 10.5 percent is achievable,” he says, “but reaching 15 percent will prove difficult without introducing property or wealth taxes.”
The RAPID research director noted that while the tax base is expanding, many individuals still file zero-income returns.
A property tax, stronger enforcement and automation could boost revenue and curb evasion, though VAT will remain constrained by the informal sector, he opines.
Islam points out another challenge. Nearly 30 percent of Bangladesh’s revenue still derives from tariffs, which are set to decline owing to recent trade concessions and tariff rationalisation following LDC graduation. “Without sincere income-tax reform,” he warns, “even achieving the 10.5 percent target will be difficult.”
A BUREAUCRATIC MUDDLE
The recent bifurcation of the NBR has become mired in bureaucratic wrangles, as the interim government failed to complete the process during its tenure.
This lack of completion has created frustration among revenue officials, who argue that delays and administrative hurdles are hampering efficiency and disrupting reform efforts.
Many fear that prolonged uncertainty may slow policy execution, weaken institutional capacity and undermine improvements in revenue collection.
Towfiqul Islam Khan, additional research director at the Centre for Policy Dialogue (CPD), argues that the NBR’s reforms were largely instrumental, driven by IMF conditionalities.
“Political parties had no involvement in the process,” he notes. “They now have their own ambitions and will act accordingly. But the interim government pushed the entire economic reform agenda without engaging political actors, and this is not an isolated case.”
Khan adds that the interim government took major economic reform decisions while completely ignoring political parties.
“As a result, the fate of these reform targets is now in question. Either the reform commission’s reports and the efforts undertaken so far will lose relevance, or the political commitments being made will prove futile,” he fears.
Even in terms of implementation, it remains unclear whether the existing NBR structure can absorb or sustain these reforms, he warns.
Stating that there has also been significant wastage of taxpayers’ money in producing reform documents, Khan notes that the unfortunate reality is that no one from the interim government will remain to answer for it.
“If the reform agenda now has to be reworked to align with the priorities of the winning political party, there will be no accountability for the public money already spent,” he says.
