More revenue must to raise budget spending to 25% of GDP

Considering the growth and nature of our economy, the budgetary expenditure should be 25% of the gross domestic product (GDP). However, the reality is that, despite many efforts, it cannot be increased to 15%. To increase expenditures, the government will have to raise its income.

A new budget is given every year with an increase of 15-16% based on the expenditure trend of previous years and in line with inflation and GDP growth targets. To expand the size of the budget, the amount of income must be increased. The problem in our country is that income is not increasing in line with the demand for expenditure.

As a result, the implementation of the budget sometimes needs to be deliberately reduced, or the amount of borrowing from various sources has to be increased. By doing so, we end up spending 23-24% of our budget on debt repayments with interest.

Administrative expenditures and debt servicing combined account for half of the budget. Since there is no room to reduce expenditure in these sectors, spending on other vital sectors, including development, must be brought down if revenue collection falls short of the target. In this situation, it becomes imperative to increase revenue collection to ensure the desired level of investment in development.

The problem is that revenue collection is not growing proportionally to the size of the economy. However, it is possible to surpass the revenue target by reducing leakages and enhancing efficiency. During my tenure as the chairman of the National Board of Revenue (NBR), I have demonstrated how this can be achieved. Until 2012, the NBR was close to its revenue collection target.

In the past, the views of the authorities concerned were given priority in setting revenue collection targets. Since 2014, targets have been set and imposed on the NBR.

New sectors are being brought under the tax net to meet this demand. As a result, the pressure on the common people is increasing, but the target of revenue collection is not being met.

Before imposing any new type of tax, the government should also highlight what kinds of services are being increased. If most of the medical expenses are made out of people's pockets, if there is no discipline in the transport system, and if the gas and electricity supply is not proper, people will be discouraged from paying taxes.

Apart from that, the tax payment process should also be simplified to increase collection. The more complicated the process, the more prone it is to disobedience. People will avoid paying taxes if they have to hire a lawyer to file a return or pay a bribe.

If the government can spend money by ensuring honesty and efficiency, the pressure on tax collection will be reduced due to savings, and revenue collection will increase as people will be more motivated to pay taxes.

Over the years, the implementation of various government projects has been stalled. As a result, the cost also increases several times. Completing the work efficiently and on time would reduce the cost pressure. Again, a timely return from the project could actually increase the income of the people and the tax collection of the government through the increase in investment.

Ensuring good governance is also very important to increase people's interest in paying taxes. Many people are maintaining a normal life in front of our eyes even after evading taxes and laundering money. In this situation, why will people go to pay taxes after being subjected to harassment? Such measures encourage people not to pay taxes.

The income of the people in rural areas, especially at the upazila level, has been increasing recently. An expansion of the tax structure should be ensured to increase revenue collection. Specific awareness programmes should be launched to remove the fear of taxation among people in rural areas. It is not difficult to bring people from all over the country under the tax net with the help of local administrations.

Without doing this, making return filings mandatory for various services and appointing agents for tax collection will increase harassment. Middlemen will harass people and spend money from the government. Taxes were collected through this process during the Zamindari period. People were also abused by the landlords.

To increase revenue collection, along with changes in the legal framework, technological improvements must be ensured. If the law is simplified, there will be no additional cost to paying taxes. Although various reforms have been taken in this sector, there has been no progress in their implementation. If the entire tax structure is not made online, it will not be possible to increase revenue collection.

Although there is a possibility of increasing tax collection through automation, there is no momentum behind such reform initiatives. This may be due to the parties affected by such reforms. Automation software is updated every three years. Sometimes the new update arrives before the purchase is completed after the system installation. Then they have to start again.

A number of project directors have worked on the VAT Online project since 2012, funded by the World Bank. A few days after one takes over the work, he leaves, and a new one comes and starts afresh. There is no example of one person advancing another person's work here.

I feel that NBR needs various reforms, including institutional structure, manpower strength, skill development of staff, and ensuring incentives.

Although the chairman of NBR is supposed to be appointed from among its members, a secretary from another cadre is being appointed for the post. This causes various problems.

In order to increase overall revenue collection, macroeconomic problems must be overcome. If there is no trade, if people's income does not increase, where will additional taxes come from?

Bank loans are being defaulted. No investment is made from such loans. Employment is not increasing and income is not increasing. If this situation continues, there is little possibility of tax increase.