Declining tax-to-GDP ratio forces increasing VAT, SD: CA’s press secy

Chief Adviser’s Press Secretary Shafiqul Alam on Sunday said that the government is striving to raise the country’s tax-GDP ratio to a sustainable level by introducing a simplified 15 percent value-added tax (VAT) system. This measure aims to foster economic growth and ensure financial stability.

Speaking at a press briefing at the Foreign Service Academy in Dhaka, Alam highlighted the ongoing challenges with revenue collection.

He revealed that since 2021, the tax-GDP ratio in Bangladesh has been declining, leading to a substantial revenue shortfall of Tk 42,000 crore in the last five months alone. "We had a revenue collection target of Tk 1,69,000 crore during this period but managed to collect just over Tk 1,26,000 crore," he said.

Alam emphasized that Bangladesh’s tax-GDP ratio is among the lowest in the world, and improving it is essential for the country's development and the welfare of its people.

The government is addressing tax inefficiencies by consolidating VAT rates into a uniform 15 percent, replacing the varying rates previously applied to different goods. This simplification aims to minimize tax leakage and streamline the system, Alam added.

Alam also criticized the previous government for misusing public funds. He pointed to extravagant projects, such as the construction of a seven-star hotel near the Karnaphuli Tunnel in Chattogram, reportedly built at a cost of Tk 450 crore for the personal convenience of former minister Saifuzzaman Chowdhury.

"The current government is focused on cutting public expenditure to rectify such misuse," Alam noted.

He warned that if the tax-GDP ratio continues to decline, it may jeopardize the country’s ability to repay its debts. "Considering this, the government has decided to increase taxes, ensuring that the revenue is used for the welfare of the people," Alam said.

Responding to concerns about the impact of increased taxes, Alam assured that the effects on citizens would be minimal.

Alam also addressed the government’s initiatives to retrieve laundered money, describing it as a top priority. He said, “We are identifying where the funds have been siphoned off and maintaining communication with the countries involved. We are receiving comprehensive cooperation in this effort.”

The press briefing was attended by Chief Adviser’s Deputy Press Secretaries Apurba Jahangir and Abul Kalam Azad Majumder, and Assistant Press Secretary Suchismita Tithi.