Bangladesh is well accredited in the global arena as one of the frontrunners in achieving the millennium development goals, and the Seventh Five-Year Plan and other policy documents of ours also reflect the high level of commitment of the government to meet the sustainable development goals (SDGs).
In this mission, the National Board of Revenue (NBR) as the apex revenue authority plays the role of the kick-starter as the ‘source of funds’ in achieving the SDGs by strengthening the domestic resource mobilisation and improving the domestic capacity for tax and revenue collection.
However, it is very important to understand how taxation and fiscal policies can play a fundamental role in achieving the SDGs and why the mobilisation and effective use of domestic resources are central to the pursuit of sustainable development that goes beyond financing.
In addition to generating funding for investments in the SDGs, efficient taxation and fiscal policies can certainly play a critical role in reducing inequalities and promoting inclusive sustainable development patterns.
Bangladesh has been able to substantially reduce poverty in the recent years and on the right track to meeting the relevant SDG goals in this regard. However, a few related issues have clouded this prospect, which demand urgent attention.
One of the key issues is the growing income disparity, which alienates a large segment of population, including women, minorities, ethnic groups and disadvantaged segments of population, from the economic and social benefits the country has to offer.
At one level, Bangladesh has made commendable progress in women empowerment, but at another level more work needs to be done to achieve equality in capacity for appropriately utilising the economic and social opportunities.
In this context, fiscal policies can be used to promote gender equality and may help achieve SDG 5 on gender equality and women empowerment. For instance, the VAT exemption given in this year’s budget to the small and medium women entrepreneurs is a classic example of how providing fiscal incentives to economic sectors where women are prominent economic actors can help reducing the inequality and thus promote balanced growth.
A more progressive taxation system also helps to address the income inequality persisting in the society. Fiscal policies can also be targeted to encourage healthy lives and well-being (for instance, by highly taxing harmful products like tobacco and alcohol while exempting healthy foods and basic necessities) and achieve better health related outcomes.
Taxation can also be used as a very effective tool to promote social inclusiveness. Businesses employing physically challenged people attracting higher tax rebate is another classic example in this regard. Tax policies may also have an impact on other areas in sustainable development, such as infrastructure investment (domestic tax incentives) and environmental sustainability (environmental surcharge) and hence it is very important to realise the interrelationships of taxation with the goals outlined in the 2030 SDG Agenda.
Simultaneously, it needs to be taken into cognizance that protection of the poorest, including through basic public spending, is an overarching concern and the fairness of a tax system cannot meaningfully be assessed in isolation of the spending it finances.
This makes it important not only to examine the distributional impact of tax reforms themselves but also to identify specific spending measures to address any concerns they raise.
Better persuading taxpayers of the value of the public spending financed by the taxes they pay, including by improving the management and quality of that spending, can further bolster trust in and compliance with the tax system.
Having realised this, the NBR is continuously engaged in building partnerships with all the relevant stakeholders both in the public and private sector. Several reform activities, including tax policy and tax administration reforms, are underway aiming at revenue mobilisation, building taxpayers’ trust and confidence.
VAT Online platform has been launched and Value Added Tax and Supplementary Duty Act 2012 has been implemented from July 1, 2019. The legislation for customs operations is also under review of the parliamentary standing committee and several projects like National Single Window and Bond Automation has been taken to modernise the customs wing in order to protect the community and the environment, ensure efficient and effective revenue collection while facilitating legitimate trade and travel in compliance with domestic and international standards.
The NBR is working to provide fair, equitable and quality service to clients; encourage voluntary tax compliance; serve as the central repository for the collection and management of trade statistics; use risk based and intelligence-led approach in enforcement activities maintaining high professional standards that reflects quality, transparency and teamwork.
All these are very positive signs indicating that Bangladesh is gradually moving towards the right direction in regards to efficient domestic resource mobilisation.
However, in the face of continuously changing economic environment and the digitisation of the economy, capacity building of the NBR’s field officers based on an international standard competency framework and providing appropriate logistics and infrastructure support for the field offices remain as the two major challenges as well as success factors for achieving the financing objective and other broader SDG goals.
Both funds and technical assistance would be required to address these challenges where different international organisations and donor agencies can play a vital role by showing their commitment to help NBR in this regard.
The political will of the government, the institutional mechanism of the organisation, the stakeholders, the citizens and the united effort of the broader international community can certainly lead to more efficient domestic resource mobilisation in attaining the SDGs which goes way beyond financing.
The author is the second secretary for VAT policy at the National Board of Revenue. He can be reached at email@example.com