Economists at a virtual discussion on Saturday proposed instituting a tax ombudsman to reduce harassment of taxpayers and ensure transparency and accountability in the activities of the revenue department.
Also, as yearly changes in the revenue law create problems for entrepreneurs in formulating sustainable plans, experts suggested making a permanent policy on tax law for several years in the budget.
At the same time, they proposed reducing the extra pressure on regular taxpayers by expanding the tax net.
They were addressing a seminar titled "National Budget 2021-22 – Policy Recommendation". The International Business Forum of Bangladesh (IBFB) organised the programme.
Presenting the keynote at the event, Abdul Majid, former chairman of the National Board of Revenue (NBR) and chairman of IBFB's finance committee, said the idea of the tax ombudsman dates back several centuries.
He said its first application was in Sweden, followed by New Zealand and the UK.
The tax ombudsman is now recognised as an effective measure for controlling arbitrary actions of revenue officials in almost all democracies around the world, said Majid.
The former NBR chairman said introducing a tax ombudsman is now very urgent so that tax officials can put extra pressure on the business community because of the additional pressure of revenue collection during the ongoing Covid-19 pandemic.
Tax ombudsman was established in Bangladesh in 2005 but was abolished in 2011. Government spending cuts and a lack of institutional capacity deterring the tax ombudsman from being effective were cited as reasons for the abolishment.
Anyone who has been harmed because of abuse of power, arbitrariness, and harassment by revenue officials during enforcement of the revenue law can appeal to the tax ombudsman seeking redress. The tax ombudsman can investigate the complaint and recommend compensation.
In addition, the tax ombudsman can investigate and take action against the tax administration for irregularities, improper enforcement of laws, and corruption.
There are tax ombudsmen in 114 countries of the world at present.
Addressing the programme as the main discussant, Dr Atiur Rahman, former governor of the Bangladesh Bank, said budget reforms are discussed every year but more reforms are needed this time because of the pandemic.
He said entrepreneurs affected by the pandemic should be given more priority.
Atiur also mentioned the need for a balanced distribution of stimulus packages announced by the government.
Mentioning revenue collection as the weakest aspect of Bangladesh, Dr Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue, proposed large-scale reforms in this sector in the next budget.
He said increasing government spending would be the most important measure for economic recovery at the moment.
"We have to increase revenue collection if we want to raise government expenditure. The NBR has been lagging the most among all government institutions for a decade. Although the revenue collection target as a percentage of GDP was set at 15-16%, it had always been below 10%," explained the noted economist.
He said a budget policy needs to be set to facilitate expansion of social security in the post-pandemic period and increase individual investment.
Dr Khan Ahmed Sayeed Murshid, director general of Bangladesh Institute of Development Studies (BIDS), said the next budget would be way more challenging.
He said the government would have to increase revenue in the next budget while offering tax exemptions as well.
Murshid also proposed offering special benefits to several sectors, including pharmaceuticals, leather, and SME, as well as the emerging ones in addition to readymade garment.
Alihussain Akberali, chairman of BSRM Group of Companies, pointed out the obstacles in the government's tariff policy on imports of raw materials.
He proposed reducing the delay at the port after raw materials are imported as well as the additional duty on raw materials of rod and cement.
Alihussain also proposed offering special benefits to local firms working with foreign companies based on sub-contracts.
IBFB President Humayun Rashid, who chaired the event, said the current revenue policy and administration structure require a review to be aligned with the best global practices so that revenue generation is not a collection-focused exercise.
"Rather, it has to be a policy- and practice-focused system centred on economic and other growth-related policies," he added.