Business leaders and economists yesterday called for a fear-free, transparent tax environment, urging the government to broaden the tax base rather than repeatedly burden compliant taxpayers.
People in Bangladesh are reluctant to pay taxes mainly because of fear and concerns over whether tax revenues are being spent transparently, said Syed Nasim Manzur, managing director of Apex Footwear.
“Unfortunately, we are living under a kind of ‘tax terrorism’. We are extremely fearful that if we come under scrutiny, the same people will be forced to pay even more taxes. This culture of fear has to be broken,” he said at a pre-budget policy dialogue organised by the Power and Participation Research Centre.
Compliant taxpayers should receive benefits, while tax evaders should face punishment under the law.
He urged policymakers to focus on expanding the tax base rather than repeatedly taxing the same businesses.
“The large multinational companies and major large taxpayers’ unit (LTU) members are essentially where the tax base remains concentrated -- the base must become bigger, not just the net,” he added.
Simeen Rahman, chief executive officer of Transcom Group, echoed the same and urged the National Board of Revenue to ensure compliance with value-added tax and supplementary duty.
“How many people are actually paying VAT? Whether you call it supplementary duty or VAT, how many are truly paying it? Where is the monitoring and vigilance? This is where the leakage in revenue occurs. And because of those non-compliant firms, we are becoming non-competitive.”
The NBR is treating the soft drinks industry the same way as tobacco, she said, adding that the industry is saddled with high supplementary duty and customs duty.
She cited the sugar tax suggested by the World Health Organisation to discourage sugar intake and recommended that the NBR examines the measures adopted by various countries.
While presenting the keynote, Hossain Zillur Rahman, executive chairman of the PPRC, said Bangladesh’s revenue system is facing a “triple challenge” of revenue underperformance, tax evasion and harassment of taxpayers.
“Revenue collection has persistently remained below target. At the same time, evasion has become a systemic issue, while harassment remains an everyday reality for both the private sector and ordinary citizens.”
Low revenue mobilisation stems from several structural weaknesses, including the failure to expand the tax base, the political economy of tax exemptions and preferential treatment, and the dominance of ad hoc enforcement practices.
“The already narrow tax base is being eroded further by exemptions and preferential treatments,” he said.
Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh, described the tax system as “primitive” and in need of radical reform.
He pointed to a narrow tax base, heavy reliance on trade taxes and widespread revenue leakage.
“We are in the era of artificial intelligence, but still running a manual tax system.”
High trade taxes are undermining economic activities and export competitiveness under a restrictive regime, he added.
Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, warned that Bangladesh is edging toward a “debt trap” due to a growing mismatch between revenue and expenditure.
“We are not generating revenue in line with our expenditure needs,” he said, citing rising reliance on borrowing.
He cautioned that weak compliance and revenue gaps also heighten the risk of a “middle-income trap”.
The upcoming budget would indicate whether the government is politically accountable through changes in the tax structure, said Rashed Al Mahmud Titumir, the prime minister’s adviser on finance and planning.
“Domestic resource mobilisation would be increased, whether through taxes or non-tax revenue, but without raising rates.”
Criticising what he called a patronage-driven system, he said tax exemptions through statutory regulatory orders (SROs) reflect a deeper structural problem.
“The entire system revolves around SRO trade… This is the core disease,” he said.
Meanwhile, NBR Chairman Md Abdur Rahman Khan said incentives will be introduced through income tax measures to support renewable energy and environmental protection, with an eye on carbon trading opportunities.
Taxpayer harassment can only be eliminated by making the system fully faceless, allowing compliance from home, a system, he said, is already in place.
He also acknowledged refund delays, saying VAT refunds have begun and income tax refunds will start from July 1, with a shift away from the minimum tax regime.
