Does size of tax-net depend on tax-rate?
This is a question that the new NBR Chief, Finance Adviser and the Chief Adviser needs to think about.
The current NBR Chief seems much effective compared to his predecessors, so far. Hope he becomes much more innovative and dynamic too. Today we would like to point out one issue today.
We would like you to consider whether lowering the tax rate would widen the tax-net. If it does, NBR should not hesitate to lower the tax rate.
To many it might be counter intuitive. But believe me, it is a better option.
There might be a scenario which says if you decrease the tax rate by 40%, the tax-net widens by 65% or 45% or 50%. Whatever that is, its very good.
But if a 40% decrease in tax rate results in 40% widening of tax-net, should you decrease it?
There might be many 50+ policymakers in Bangladesh right now, who would suggest you not to consider this. They will say to you that it does not help, since the total revenue of the government would not increase. Shudhu shudhu vejal barbe, kaj barbe without any tangible benefit, they would opine.
They could not be more wrong.
Even if the total revenue remains the same (i.e. if these two things are equally or perfectly elastic within certain limit), it will still be beneficial for the country. If you don't understand it, don't be ashamed. Just do it. You will see the result. But I am sure it will be evident.
To name a few, if the widening rate is same as decreasing rate of tax-rate (i.e. if the total revenue do not increase and the same amount of money is collected from more more people and businesses and it involves more work on the part of NBR), its still a better option for Bangladesh. It will create more level playing field for those taxpayers who abide by the law. Also, it will increase the productivity of the already law abiding businesses which will eventually increase the revenue of the NBR in years to come. More importantly, it will create more jobs.
If you thought some of the ideas are worth of your reading time, please forward it to others. If you have an ear to the columinsts in regular traditional media, please forward it to them. If you have an ear to the journalists and news editors of the electronic media, discuss it with them. Hope they would look at the suggestions and give due diligence.
Thanks for your time,
Innovation Line
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Note: This is a freelance column, published mainly in different internet based forums. This column is open for contribution by the members of new generation, sometimes referred to as Gen 71. If you identify yourself as someone from that age-group and want to contribute to this column, please feel free to contact. Thanks to the group moderator for publishing the article.
Dear readers, also, if you thought the article was important enough so it should come under attention of the head of the government please forward the message to them. Email address for the Chief Advisor: feeedback@pmo.gov.bd or at http://www.cao.gov.bd/feedback/comments.php . The more of you forward it to them, the less will be the need to go back to street agitation. Use ICT to practice democracy. It is already proven that this government responds to the feedback.
You can also send it to Bangladesh Bank at this email: gm2combb@bangla.net
Don't forget to send it to the NBR man himself (most important): bdnbr@mail.com
And to the Ministry of Finance info@mof.gov.bd
OR
http://www.mof.gov.bd/contact/email.html
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