Speakers at a dialogue said that the income inequality in Bangladesh is widening due to indirect tax burden to lower income groups, while rich people are paying less comparing to their income and wealth.

The speakers said this while speaking at a policy dialogue on ‘Using direct taxation to tackle inequality and boost revenue’ held at BRAC Inn in the capital on Wednesday (December 28, 2022).

Dr. Mohammad Abdur Razzaque, Chairman of Research and Policy integration for Development (RAPID) presented a keynote paper on the topic.

Former chairman of NBR Dr Muhammad Abdul Mazid, Director General of BCS (Tax) Academy MM Fazlul Haque, Professor of DU Dr Abu Eusuf, Finance Division (budget) joint secretary Dr Mohammad Abu Yusuf, ERD Joint Secretary Md Anowar Hossain, among others, spoke in the function.

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RAPID Chairman Dr Razzaque explained in the keynote paper that income inequality is widening in society despite growth in manufacturing, agriculture, and other sectors due to an unjust taxation system.

This income discrimination would be more if the reform in the taxation system is not done with a strong commitment to the nation, he pointed out.

“Comparing the small GDP of many other economies in the world, Bangladesh earns only 35 percent of its revenue from direct tax while it is 65 percent from indirect tax. It is expected to be 70 percent revenue from the direct tax, considering the volume of the country’s (Bangladesh) economy like some other countries,” he added.

Dr Razzaque said that recently the NBR announced to increase the share of direct tax from 35 to 70 percent of total revenue – which is a welcome initiative and will drive economic growth and strengthen the government’s ability to provide essential public services.

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But the implementation of the target is far behind the projected time, he said.

Dr Abdul Mazid said, “The NBR must be established as a state agency, and not a government agency. As such, NBR should not be dependent on the government. Rather, it should be an independent operator on behalf of the state.”

He emphasized long-term planning to increase revenue collection by reforming Bangladesh's taxation system and the NBR.