Using direct taxation to reduce inequality and boost revenue
This policy brief outlines strategies to enhance Bangladesh’s direct taxation system to increase revenue and reduce inequality. Key recommendations include broadening the tax base, improving tax administration, and rationalising exemptions and rates.
Authors
Jillur Rahman
Deputy Director, Research and Policy Integration for Development (RAPID)
Rabiul Islam Rabi
Associate Director, Research and Policy Integration for Development (RAPID)
Deen Islam
Research Director, Research and Policy Integration for Development (RAPID)
Abu Eusuf
Executive Director, Research and Policy Integration for Development (RAPID)-
Razzaque-et-al-Policy-Brief-January-2023.pdf
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This policy brief presents a set of policy recommendations for expanding and strengthening the direct taxation regime to boost revenue and tackle inequality in Bangladesh. The findings and recommendations are based on a RAPID research paper.
Major recommendations for promoting direct taxation:
- Develop a roadmap and action plan of policy measures to achieve the new direct taxation target
- Broaden the income tax net, making it consistent with the economy's growth performance to be reflected in the number of taxpayers
- Increase the number of registered taxpayers
- Strengthen the capacity of the National Board of Revenue
- Review and rationalise tax exemptions and incentives
- Introduce an automated and centralised audit system to encourage the taxpayers and boost their confidence
- Increase the non-taxable income floor and the highest personal income tax rate
- Deduct calculable tax obligations at the source
- Rationalise corporate tax rates
- Notify the registered taxpayers to submit tax returns