Despite its compulsion to raise revenue earning, the government has in the past decade not been able to modernise tax-related laws.
Official documents show, none of the new laws on value added tax (VAT), customs and income tax, that were initiated in 2009, the year the Awami League assumed office, has been made effective.
As a result, the tax authorities have to abide by the old laws and system in collecting and increasing the revenue.
The National Board of Revenue (NBR) is still using the law that was enacted in 1991 to collect VAT from the businessmen.
The new VAT law, enacted in 2012, was scheduled to make its journey in July 2017. The deadline was, however, deferred by two years in the face of resistance from the business community.
As per the new deadline, it is scheduled to come into force in July next.
Asked about the matter, former caretaker government’s finance adviser AB Mirza Azizul Islam said the amendment to a law should begin at the beginning of a government’s tenure.
He said if a law is planned to be made effective at the end of a regime, it creates unwanted situation for the government.
“The law is not enough, its full execution is a must,” he added.
Many of the taxable people, Mirza Aziz added, are evading VAT while there are nowadays many people in the villages who earn more than Tk 250,000 in a financial year.
“Initiatives must be taken to bring them under the tax net.”
The target of the revenue has increased by six and half times in the past 10 years.
According to NBR, in the fiscal 2009-10, it was given a target of earning revenue amounting to Tk 610 billion, which has been raised to Tk 3,000 billion in the current fiscal year.
In 2017, businesspeople protested and demanded separate VAT charges instead of a unified slab of 15 per cent VAT for all. The government backtracked on the deadline.
The NBR too did nothing in this regard in the past one and half years.
The authorities have not yet fixed the amendable areas in the new VAT law. The NBR just served a notice to the commissioners in this regard in the past month.
Also, it requested two universities and a research firm to survey the possible impact of the new VAT law.
Under the circumstances, the NBR will get only five months to complete the entire process.
NBR member Rezaul Hasan, however, expressed confidence that the revenue board will be able to implement the law in due time.
“We’re ready to implement the new law. When the law was introduced in 2017, the businessmen were not ready to comply with the it as they do not have the appropriate software to regulate the VAT payment system. We’ve already directed them in this regard. If they fail to do so this time around, it’s their own fault,” he said.
The NBR has in the meantime started redrafting the customs law in 2012.
Upon completion of other formalities, the authorities were supposed to execute the new customs law in July 2018, according to officials concerned.
The draft law was approved by the cabinet last year but not rubberstamped by parliament. The law might be raised in parliament during the next budget session.
The country is currently using the customs law of 1969.
The income tax law is also quite old -- the one made in 1984.
The NBR decided to amend the law 10 years ago. In the meantime, the authorities have just drafted English version of the new law. They are now planning to make it in Bangla, officials said.
NBR officials said the final draft of the law would be sent to the cabinet division before the next budget session.
If enacted in due time, the NBR is planning to implement the new law in the fiscal 2020-21.
“We want the new government to implement new VAT, tax and customs law as soon as possible,” said former president of Dhaka Chamber of Commerce and Industry Abul Kashem Khan.
He said there would be multi tiers in the new VAT law as per demand of the business community.
The laws on customs and income tax, he added, must also have reflections of recommendations made by the businesspeople and the new laws must ensure hassle-free tax payment and business transactions.
* This report, originally published in Prothom Alo print edition, has been rewritten in English by Toriqul Islam