A new milestone in revenue growth

The three-and-a-half hours journey from Barisal to Dhaka used to seem like a distant dream, before the Padma Bridge was operational. However, now that the bridge has been opened, this dream has become a reality. The bustling city of Khulna and the thriving Mongla seaport are now easily accessible within a mere three to four hours journey. This magnificent bridge serves as a direct link between 19 districts in the south and south-western regions, enhancing social and economic connectivity. Through its concrete and steel structures, it is bridging the gap and facilitating communication across the Padma River.

Beyond its impressive infrastructure, this bridge holds a significant distinction. It is a remarkable mega project that has been solely financed with national funds, setting it apart from other major development endeavors in Bangladesh. Unlike most projects that heavily rely on financial aid from foreign countries and development partners, the Padma Bridge stands as an exception. The absence of loans from any country reinforces its significance as a fully nationally-funded endeavor.

Between April and June 2011, loan agreements were signed with international organizations such as the World Bank, Asian Development Bank (ADB), JICA, and Islamic Development Bank (IDB) to finance the Padma Bridge project. However, the World Bank withdrew its financing, citing allegations of corruption. Other donor agencies also fell behind in providing support. In response, the government of Bangladesh made a bold announcement that it would construct the Padma Bridge using its own resources, without the need for external funding.

After the cancellation of the World Bank loan agreement, doubts arose regarding the feasibility of building the Padma Bridge. Yet, against all odds, the impossible became possible. With determination and unwavering commitment, the country succeeded in constructing a bridge of immense potential solely through its own funding.

Undertaking such a colossal project with limited resources was undoubtedly a challenging task. However, the successful implementation of the Padma Bridge has instilled a sense of confidence and pride within the nation. Bangladesh has proven itself on the world stage, standing tall and showcasing its capabilities. This remarkable achievement was made possible due to the rapid pace of revenue collection.

Furthermore, aside from the Padma Bridge, the country has achieved significant milestones in its development, such as the metro rail, Bangabandhu tunnel, and deep-sea port. All of these groundbreaking projects were made possible through the country's self-reliance. The National Board of Revenue (NBR) has played a pivotal role in mobilizing internal resources, enabling the nation to achieve self-sufficiency. The NBR's development-oriented and business-friendly fiscal policies have been instrumental in facilitating Bangladesh's journey toward self-reliance.

However, following its independence in 1971, Bangladesh was labeled a "basket case" by the late former US Secretary of State Henry Kissinger due to its war-torn state, widespread poverty, and frequent natural disasters. Kissinger also expressed doubts about the country's ability to repay its foreign debt. However, his concerns have been proven wrong. Presently, Bangladesh stands as one of the world's success stories in terms of debt repayment.

Notably, Nicholas Kristof, a renowned columnist from Kissinger's home country and a prominent figure at the New York Times, has even suggested that US President Biden should look to Bangladesh as a source of inspiration for combating poverty.

The country's revenue sector plays a significant role in this remarkable achievement, with the National Board of Revenue (NBR) being the primary contributor. Since its establishment in 1972, the NBR has undergone significant growth and development, overcoming various challenges along the way. In the fiscal year 1972-73, shortly after independence, the revenue collection amounted to Tk1.663 billion. However, in the most recent financial year of 2022-23, it has skyrocketed to a staggering 3250 billion. This represents an astounding increase of 1,954.29 times in revenue collection over a span of 53 years since independence.

If we examine the growth rate of revenue collection over each decade, it becomes evident that the revenue collection in the fiscal year 1982-83 amounted to Tk19.99 billion, which is twelve times higher than the previous decade. Moving forward to the next decade, in the fiscal year 1992-93, the revenue collection reached 85.37 billion, which is more than four times the amount collected in the previous decade. Analysts attribute the decline in revenue collection during this period to the presence of non-political governments in power.

During the 1990s, the country witnessed significant political transformations. As a result of various reforms, the revenue collection only increased threefold throughout this decade. In the fiscal year 2002-03, the revenue collection amounted to Tk237.50 billion. However, the subsequent decade experienced a remarkable surge, with the revenue collection increasing more than fivefold. In the fiscal year 2012-13, the National Board of Revenue (NBR) collected a revenue of Tk1122.59 billion. Nevertheless, the most revolutionary changes in the country occurred in the last decade, where the Revenue Board recorded a staggering revenue of Tk3250 billion in the financial year 2022-23.

The revenue collection has experienced significant growth by implementing various strategies. These strategies encompass automation, expanding the tax net, enhancing efficiency, promoting transparency and accountability, and fostering a tax culture. Over the past few years, the Income Tax Department has diligently worked towards reducing tax rates, enabling online filing of income tax returns, providing e-tax services, and expanding tax education to encourage taxpayers. The introduction of the new Income Tax Act in 2023 has simplified the process of tax payment, eliminating previous complexities.

Furthermore, the complete implementation of the ASYCUDA system in 2014 and the enactment of the new VAT law in 2019 have brought about revolutionary changes in the VAT system. Online VAT registration, return filing, and tax payment, along with the automatic storage of VAT documents, have streamlined the VAT process. The Customs Department's Authorized Economic Operators (AEOs) have implemented Advance Ruling, Scanning, and Advance Passenger Information (API) to ensure trade facilitation, revenue preservation, and national and social security, while also expediting the clearance of goods. The advancements in information technology, along with the expansion and development of infrastructure, including the creation of a tax-friendly business environment and the comprehensive overhaul of the entire tax system, have played a pivotal role in the significant improvement of revenue collection.

As an independent sovereign nation, it has achieved unprecedented success in all aspects of socio-economic development, including remarkable economic prosperity. The key to attaining these remarkable milestones lies in self-reliance. The Department of Internal Resources plays a crucial role in realizing the vision of transitioning from a least developed country to a middle-income country by 2026, and ultimately becoming a developed country by 2031-2041. To achieve this, it is imperative to adopt development-oriented and business-friendly revenue policies.

However, despite the continuous increase in revenue collection, it still falls short of the desired target. Stakeholders believe that the obstacles to achieving the set goals are threefold:
• policy reforms,
• administration reforms, and
• the implementation of reforms.

They argue that revenue collection has not kept pace with the growth of the economy over the past decade. Paying taxes remains a challenge, and taxpayers continue to harbor fears. Additionally, certain industrial sectors have benefited from tax exemptions, which have been exploited and misused. The reform initiatives face hindrances from influential groups, and the full automation process is yet to be completed.

NBR officials, on the other hand, attribute the shortfall in revenue collection to the practice of setting ambitious targets each fiscal year, lack of coordination and delays in survey activities to expand the tax base, inadequate information exchange in inter-tax management, shortage of skilled manpower, and insufficient infrastructure and facilities. These factors collectively contribute to the inability to meet revenue targets.

Nevertheless, the officials have mentioned that steps have been taken to address these challenges, and they believe that this problem may not persist in the future. They anticipate an increase in the speed of revenue collection.

Reports indicate that various measures have been implemented to boost revenue collection. These include expanding the scope of income tax and VAT, implementing a 100% online VAT return filing system, introducing an online system for tax deduction at source at all levels, implementing A-invoice for online tax payment, introducing a digital income tax audit system, enhancing the efficiency of tax collection officials, and emphasizing the simplification of the taxation system.