An Evaluation of the Bangladesh Tax System

This study assesses the tax system of Bangladesh in terms of revenue mobilization (tax efficiency), incidence across income groups, and allocative efficiency against best international practices in tax policy and administration and taxpayer’s relations. The authors also examine the scope for further reforms that authorities may consider in order to enhance buoyancy in revenue generation. In order to further accelerate Bangladesh’s economic growth over the medium-term, considerable public sector investment is required tobuild and enhance power generation and distribution, transport and other infrastructure. Without a substantial increase in domestic public resources, these public goods cannot be provided in order to foster the targeted level of growth. Ideas for Growth Improving tax efficiency will require major reforms in a number of areas and policy reforms must be accompanied by the modernisation of the tax administration structures if Bangladesh is to improve is revenue collection. Without major reform, Bangladesh will be unable to attain the tax to GDP ratio of 12.4% from the current level of 10% as targeted in the Sixth Five Year Plan.

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