[ALOCHONA] Country lost Tk 210 billion in evaded taxes in fiscal 2009-10

Country lost Tk 210 billion in evaded taxes in fiscal 2009-10

Transparency International Bangladesh (TIB) on Wednesday revealed that the country lost around Tk 210 billion in evaded taxes in fiscal 2009-10.The evaded tax was 2.8 per cent of the national income and one-third of the revenue collected at present by the National Board of Revenue (NBR), the TIB said unveiling the key findings of its research on NBR. The research paper, titled 'The National Board of Revenue: Challenges in Transparency and Accountability and Its Way Out', was presented at a roundtable at the CIRDAP auditorium.

Former advisers to the caretaker government Dr Mirza Azizul Islam and Dr Akbar Ali Khan, former NBR chairman Badiur Rahman, and NBR members Aminur Rahman and Farid Uddin attended the roundtable, chaired by TIB trustee board chairman M Hafizuddin Khan.TIB researchers M Zakir Hossain and Nina Shamsunnahar carried out the study on sampling method. The research team collected data from 713 people and 50 businessmen. The team conducted the research from April 2007 to February 2011.

The TIB paper mentioned that an additional 34 per cent of revenue could have been collected in fiscal 2009-10 if the NBR would be able to realize the evaded taxes.
The reasons identified on avoiding payment of taxes by potential taxpayers include absence of citizen benefits, lack of confidence in the government on proper utilisation of the taxes paid, complex tax collection system, underhand dealing by taxpayers and taxmen, absence of exemplary punishment for tax evasion, and lack of automation and e-governance.

The TIB research has found that black money totaling Tk 90 billion was whitened in 1976-2006 period. It said the black money whitening scheme had neither helped the NBR in collecting higher revenue, nor was it morally acceptable.

The TIB has recommended scrapping the black money whitening scheme, mandatory financial transaction through banking channel, and making public the wealth statement submitted by the policymakers.

The TIB study also identified that tax-GDP ratio has increased only 6.5 per cent in the last 35 years as the government gave less priority on increasing tax revenue earning. It has recommended ensuring efficiency, transparency and accountability of the NBR to boost tax collection.TIB said that the existing tax structure puts much pressure on low income people due to high rates of indirect tax. In its report, the TIB also identified tax evasion as a major reason for the country's poor tax-GDP ratio.

Referring to the 2010 national household survey, the TIB report said 62 percent of the holders of taxpayers identification number (TIN) faced harassment at the time of tax assessment and registration.The TIB said taxpayers have spent Tk 3500 on an average for bribing the tax officials for tax assessment and also faced harassment on getting tax rebate.

In case of imported consignments, around 72 percent of the people had to pay bribe to get clearance from the ports.The TIB has recommended the government to appoint a chairman of NBR for at least three annual budgets.

For resolving complexities in the tax appeal process, the TIB report has recommended appointment of judges, income tax lawyers and chartered accountants as members of the appellate tribunal.The report criticized abolition of the Tax Ombudsman Act instead of reforming it. It said the move will fuel corruption and irregularities in the tax administration. But the NBR has rejected the TIB findings and opposed the method of calculating Tk 210 billion in tax evasion.

"I've doubts about the amount. The TIB doesn't clarify whether it is because of the gap in tax that could be collected from potential taxpayers or tax evasion," said NBR member (customs and VAT administration) Farid Uddin at the roundtable.

He, however, accepted the allegation on distortion in the tax system and lack of skill and capacity of taxmen. "Still, the country is collecting 39 percent revenue at customs points. But manpower strength is very poor in those points. The NBR has appointed PSI (pre-shipment inspection companies) for this reason, but it failed to perform well," he said.

The NBR member said the present requirement of manpower is 4,000 but there are only 1,200 officials working at the customs points. "Most of the officials, promoted from field level are under-graduates or aged over 55." He said the NBR has moved to digitalise all its services to address the allegations on harassment.

NBR member (income tax policy) Aminur Rahman said: "Other countries calculate provincial tax along with central tax revenue, but we are not. It can be a reason of poor tax-GDP ratio in the country."

He said the NBR is often forced to give tax exemption on different grounds including curbing prices of essential food items.

Aminur Rahman said the NBR has taken appropriate steps to check tax evasion, but it wants to build up voluntary compliance for payment of tax.

Former adviser to the caretaker government Dr Akbar Ali Khan rejected the TIB recommendation of disclosing wealth information of policymakers, saying that tax information cannot be disclosed.He said the NBR will have to be cautious about maintaining privacy of the taxpayers so that they can keep confidence on showing actual earnings.Akbar Ali Khan, also a former NBR chairman, stressed the need for a detailed study on tax matters and said that the TIB's research findings are not acceptable on some points.

Another adviser to the caretaker government, Dr Mirza Azizul Islam has expressed its doubt on credibility of the TIB research findings as it was conducted on a small segment of taxpayers, only numbering 713, out of thousands. "It won't be prudent to come to a conclusion on the basis of those findings," he said.

Former NBR chairman Badiur Rahman said the government's willingness is needed for boosting revenue collection. He suggested that undisclosed money can only be allowed to be whitened after collection of normal tax.

http://www.unbconnect.com/component/news/task-show/id-44498

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