Update--------- Wednesday April 28 2010
Bangladesh: Today’s Review
The proposal to introduce tax cards and beyond
The Dhaka Chamber of Commerce and Industry (DCCI) has come out with a unique idea of introducing tax cards to help boost tax revenue and better tax compliance.
What the DCCI has suggested is that tax cards to be issued by the government would make the taxpayers entitled to certain monetary and non-monetary benefits.
According to the proposal floated in a concept paper submitted by the chamber recently to the ministry of finance, the holders of six types of tax cards, to be categorized on the basis of amounts of tax paid, should be offered certain privileges in public sector medical services, ports, banks, hotels educational institutions, capital market and services provided by the government. The chamber has a feeling that the cards would be status symbols in a society where tax evasion is extensive.
The DCCI is right in its observation that taxpayers lose interest in tax payments since the state is failing to provide any incentive to them. Both taxpayers and non-taxpayers are treated equally when it comes to public sector service and benefit delivery system.
There is no denying that systemic failures are basically responsible for poor tax compliance in Bangladesh where only 0.8 million (800,000) people pay income tax. But the frustration among the people about both quality and quantity of services made available by the government has been surely contributing to lower rate of tax compliance. Many people, who are eligible to pay tax, do refrain themselves from paying tax out of the feeling that as taxpayers they would not be entitled to any benefit, financial or otherwise.
However, the government cannot differentiate between a taxpayer and a non-taxpayer in service delivery or any other matter for the country's Constitution prohibits such differentiation. The state, according to article 19 of the Constitution, shall endeavour to ensure equality of opportunity to 'all citizens'.
The finance minister, reportedly, appreciated the tax-card proposal and assured the DCCI of considering the same seriously for inclusion in the next budget.
But anyone while appreciating the DCCI proposal cannot overlook the government's limited capacity to deliver its services to the people. For instance, the number of government hospitals is very limited and the quality of services offered in these facilities has been poor. The large individual taxpayers who are few in numbers would never go to government hospitals.
But a good number of middleclass taxpayers would prefer government hospitals if the government decides to offer quality health services to taxpayers. In that case, non-taxpayers, who are generally poor, might be deprived of inadequate attention that they are getting now in government-run health facilities.
The government is likely to face similar situation in other service delivery areas if it decides to offer certain privileges to the taxpayers.
There are, thus, some risks if the government decides to introduce tax cards without creating necessary facilities for the privileged taxpayers. Then again, frustration among the taxpayers would go further up if the government fails to make available the promised incentives to the taxpayers.
So, the government might consider offering a few incentives to the taxpayers that would not anyway encroach upon the scanty facilities enjoyed by the poorer sections of the society.
In the meanwhile, it should try to create some facilities exclusively for the taxpayers, without giving rise to a sense of discrimination among the citizens who do not have tax-payable incomes.
The proposal to introduce tax cards to help encourage better tax compliance deserves appreciation, no doubt. But the problem of tax evasion is so extensive that it needs more effective solution.
Though the collection of income tax has gone up in recent years, it is still a small amount compared to actual potentials. Without a wholesale reform of the tax administration and effective chasing of the tax evaders by a determined and dedicated group of revenue officials, the government can hardly expect any major improvement in direct tax collection in the near future.
On the top of everything, the people who run the administration do need to be clean as far as their tax payments. Had they been really clean in their annual tax return submission the reform and speed in tax collection would have come automatically.
US President Barack Obama and his wife together have paid $ 1.8 million in taxes to the government. The payment included the tax on Obama's income from two of his best selling recent books. In the USA, the people are informed about the assets their leaders own and the tax they pay every year. Shouldn't the government leaders, politicians of high stature, top businesses and professionals, at least, try to set a few such examples?
----------------------------------------
SAARC summit begins today
Leaders assemble in Thimpu to attend 16th meet
The South Asian leaders assembled in this panoramic mountainous city to attend the 16th SAARC summit beginning tomorrow (Wednesday) to take a joint initiative to tackle the terrible impact of the changing climate as well as to boost trade among the 8-member regional grouping.
Climate change is the key theme of the Thimpu Summit, as the impact of the changing climate is not only the greatest long-term threat to the region but a pressing global challenge as well.
Addressing the threat of climate change is an integral component of the overreaching SAARC goal of poverty in South Asia. Bangladesh and the Maldives are recognised as the worst victims of the global warming.
Afghanistan President Hamid Karzai, Bangladesh Prime Minister Sheikh Hasina, host Bhutanese Prime Minister Jigme Y Thinley, Indian Prime Minister Dr Manmohan Singh, Maldives President Mohamed Nasheed, Nepalese Prime Minister Madhav Kumar Nepal, Pakistan Prime Minister Syed Yousuf Raza Gilani and Sri Lankan President Mahinda Rajapakse will attend the Silver Jubilee Summit.
The South Asian Association for Regional Cooperation (SAARC) that started its journey from Bangladesh in 1985 with a dream of improving the socio-economic condition of 1.5 billion people of this impoverished region marks Silver Jubilee this year.
Prime Minister Sheikh Hasina, who arrived in Thimpu Tuesday morning, will lead Bangladesh at the two-day summit. She will deliver a statement along with other SAARC leaders at the opening session to be xheld at the Grand Assembly Hall tomorrow (Wednesday) afternoon.
Prime Minister Hasina is likely to call for establishment of SAARC Himalayan Council, in the model of the Artic Council, for assisting affected countries in the region.
She may propose for setting up an International Adaptation and Research Centre in Bangladesh for recommending adaptive measures because of the country's years of experience in adaptation.
Representatives of nine observers with SAARC - Australia, China, Iran, Japan, South Korea, Myanmar, Mauritius, USA and the European Union - will also be present at the summit.
Bhutan, a founder member of the SAARC, is hosting the summit for the first time within two years of the establishment of a democratically elected government in 2008 ending the 100 years of monarchy.
The 16th summit will make a separate declaration on climate change -Towards a Green and Happy South Asia.
Two agreements - one on environment and the other on trade in services - will be signed during the summit.
The SAARC convention on environment is expected to promote cooperation among the member countries in the field of environment and sustainable development.
Indian Foreign Secretary Nirupama Rao says the scope of cooperation under the convention will extend to exchange best practices and knowledge, capacity building and transfer of eco-friendly technology in areas like climate change, coastal zone management, wildlife conservation and environmental impact assessment studies.
The SAARC agreement on trade in services is expected to enable the realization of the region's immense potential in services areas such as health, hospitality, communications, computer and information and air transport, and augment intra-regional trade in services.
One of the highlights of the Thimpu summit would be the inauguration of the Permanent Secretariat of the SAARC Development Fund (SDF) with initial capital of US$ 300 million to support SAARC socio-economic projects including on climate change.
On the second day of the summit (Thursday), the SAARC leaders will go for retreat at the 'SAARC Village' and hold informal discussions on issues relating to SAARC.
On the sidelines of the summit, the leaders will also seize the opportunity to hold bilateral meetings.
The 16th summit will end on Thursday adopting the 'Thimpu Declaration' and the 'Declaration on the Climate Change'.
--------------------------
BB to launch Tk 5b re-financing scheme for jute sector
Bangladesh Bank (BB) is going to launch a re-financing scheme worth Tk 5.0 billion for revamping the country's jute sector, officials said.
A proposal was approved at a board of directors meeting held at the central bank Tuesday with Bangladesh Bank (BB) Governor Atiur Rahman in the chair.
"The board of directors has given approval to launching of such re-financing scheme to facilitate the jute industry," a BB senior official told the FE, adding that only state-owned jute mills would be entitled to get such facility.
The central bank will issue a circular in this connection shortly, the BB official said, adding that the jute mills would be able to receive loan from the state-owned commercial banks.
Currently, 16 state-owned jute mills are operational, four have been leased out and four are closed.
BB asks banks not to finance land buying
The Bangladesh Bank (BB) has asked the commercial banks to stop financing for land purchase as increased flow of credit in the unproductive sector is adversely affecting the economy.
The central bank has taken the measure after imposing restrictions on purchase or lease of fixed assets including land by the commercial banks to protect public interest.
"We've instructed the banks not to invest in or finance any land purchase in line with the existing bank companies' act," a BB senior official told the FE, adding that the prices of land have abnormally increased following higher demand of the fixed asset.
"We've found that investments in land purchase have increased abnormally. Such increased flow of loans in the unproductive sector has negatively affected the national economy," the central bank official noted.
The central bank issued a circular in this connection Tuesday and asked the chief executives and managing directors of all commercial banks to comply with the instructions properly.
On January 25 this year, the BB imposed restrictions on purchase or lease of fixed assets including land by the commercial banks to protect public interest.
------------------------------
Bangladesh: Today’s Review
The proposal to introduce tax cards and beyond
The Dhaka Chamber of Commerce and Industry (DCCI) has come out with a unique idea of introducing tax cards to help boost tax revenue and better tax compliance.
What the DCCI has suggested is that tax cards to be issued by the government would make the taxpayers entitled to certain monetary and non-monetary benefits.
According to the proposal floated in a concept paper submitted by the chamber recently to the ministry of finance, the holders of six types of tax cards, to be categorized on the basis of amounts of tax paid, should be offered certain privileges in public sector medical services, ports, banks, hotels educational institutions, capital market and services provided by the government. The chamber has a feeling that the cards would be status symbols in a society where tax evasion is extensive.
The DCCI is right in its observation that taxpayers lose interest in tax payments since the state is failing to provide any incentive to them. Both taxpayers and non-taxpayers are treated equally when it comes to public sector service and benefit delivery system.
There is no denying that systemic failures are basically responsible for poor tax compliance in Bangladesh where only 0.8 million (800,000) people pay income tax. But the frustration among the people about both quality and quantity of services made available by the government has been surely contributing to lower rate of tax compliance. Many people, who are eligible to pay tax, do refrain themselves from paying tax out of the feeling that as taxpayers they would not be entitled to any benefit, financial or otherwise.
However, the government cannot differentiate between a taxpayer and a non-taxpayer in service delivery or any other matter for the country's Constitution prohibits such differentiation. The state, according to article 19 of the Constitution, shall endeavour to ensure equality of opportunity to 'all citizens'.
The finance minister, reportedly, appreciated the tax-card proposal and assured the DCCI of considering the same seriously for inclusion in the next budget.
But anyone while appreciating the DCCI proposal cannot overlook the government's limited capacity to deliver its services to the people. For instance, the number of government hospitals is very limited and the quality of services offered in these facilities has been poor. The large individual taxpayers who are few in numbers would never go to government hospitals.
But a good number of middleclass taxpayers would prefer government hospitals if the government decides to offer quality health services to taxpayers. In that case, non-taxpayers, who are generally poor, might be deprived of inadequate attention that they are getting now in government-run health facilities.
The government is likely to face similar situation in other service delivery areas if it decides to offer certain privileges to the taxpayers.
There are, thus, some risks if the government decides to introduce tax cards without creating necessary facilities for the privileged taxpayers. Then again, frustration among the taxpayers would go further up if the government fails to make available the promised incentives to the taxpayers.
So, the government might consider offering a few incentives to the taxpayers that would not anyway encroach upon the scanty facilities enjoyed by the poorer sections of the society.
In the meanwhile, it should try to create some facilities exclusively for the taxpayers, without giving rise to a sense of discrimination among the citizens who do not have tax-payable incomes.
The proposal to introduce tax cards to help encourage better tax compliance deserves appreciation, no doubt. But the problem of tax evasion is so extensive that it needs more effective solution.
Though the collection of income tax has gone up in recent years, it is still a small amount compared to actual potentials. Without a wholesale reform of the tax administration and effective chasing of the tax evaders by a determined and dedicated group of revenue officials, the government can hardly expect any major improvement in direct tax collection in the near future.
On the top of everything, the people who run the administration do need to be clean as far as their tax payments. Had they been really clean in their annual tax return submission the reform and speed in tax collection would have come automatically.
US President Barack Obama and his wife together have paid $ 1.8 million in taxes to the government. The payment included the tax on Obama's income from two of his best selling recent books. In the USA, the people are informed about the assets their leaders own and the tax they pay every year. Shouldn't the government leaders, politicians of high stature, top businesses and professionals, at least, try to set a few such examples?
----------------------------------------
SAARC summit begins today
Leaders assemble in Thimpu to attend 16th meet
The South Asian leaders assembled in this panoramic mountainous city to attend the 16th SAARC summit beginning tomorrow (Wednesday) to take a joint initiative to tackle the terrible impact of the changing climate as well as to boost trade among the 8-member regional grouping.
Climate change is the key theme of the Thimpu Summit, as the impact of the changing climate is not only the greatest long-term threat to the region but a pressing global challenge as well.
Addressing the threat of climate change is an integral component of the overreaching SAARC goal of poverty in South Asia. Bangladesh and the Maldives are recognised as the worst victims of the global warming.
Afghanistan President Hamid Karzai, Bangladesh Prime Minister Sheikh Hasina, host Bhutanese Prime Minister Jigme Y Thinley, Indian Prime Minister Dr Manmohan Singh, Maldives President Mohamed Nasheed, Nepalese Prime Minister Madhav Kumar Nepal, Pakistan Prime Minister Syed Yousuf Raza Gilani and Sri Lankan President Mahinda Rajapakse will attend the Silver Jubilee Summit.
The South Asian Association for Regional Cooperation (SAARC) that started its journey from Bangladesh in 1985 with a dream of improving the socio-economic condition of 1.5 billion people of this impoverished region marks Silver Jubilee this year.
Prime Minister Sheikh Hasina, who arrived in Thimpu Tuesday morning, will lead Bangladesh at the two-day summit. She will deliver a statement along with other SAARC leaders at the opening session to be xheld at the Grand Assembly Hall tomorrow (Wednesday) afternoon.
Prime Minister Hasina is likely to call for establishment of SAARC Himalayan Council, in the model of the Artic Council, for assisting affected countries in the region.
She may propose for setting up an International Adaptation and Research Centre in Bangladesh for recommending adaptive measures because of the country's years of experience in adaptation.
Representatives of nine observers with SAARC - Australia, China, Iran, Japan, South Korea, Myanmar, Mauritius, USA and the European Union - will also be present at the summit.
Bhutan, a founder member of the SAARC, is hosting the summit for the first time within two years of the establishment of a democratically elected government in 2008 ending the 100 years of monarchy.
The 16th summit will make a separate declaration on climate change -Towards a Green and Happy South Asia.
Two agreements - one on environment and the other on trade in services - will be signed during the summit.
The SAARC convention on environment is expected to promote cooperation among the member countries in the field of environment and sustainable development.
Indian Foreign Secretary Nirupama Rao says the scope of cooperation under the convention will extend to exchange best practices and knowledge, capacity building and transfer of eco-friendly technology in areas like climate change, coastal zone management, wildlife conservation and environmental impact assessment studies.
The SAARC agreement on trade in services is expected to enable the realization of the region's immense potential in services areas such as health, hospitality, communications, computer and information and air transport, and augment intra-regional trade in services.
One of the highlights of the Thimpu summit would be the inauguration of the Permanent Secretariat of the SAARC Development Fund (SDF) with initial capital of US$ 300 million to support SAARC socio-economic projects including on climate change.
On the second day of the summit (Thursday), the SAARC leaders will go for retreat at the 'SAARC Village' and hold informal discussions on issues relating to SAARC.
On the sidelines of the summit, the leaders will also seize the opportunity to hold bilateral meetings.
The 16th summit will end on Thursday adopting the 'Thimpu Declaration' and the 'Declaration on the Climate Change'.
--------------------------
BB to launch Tk 5b re-financing scheme for jute sector
Bangladesh Bank (BB) is going to launch a re-financing scheme worth Tk 5.0 billion for revamping the country's jute sector, officials said.
A proposal was approved at a board of directors meeting held at the central bank Tuesday with Bangladesh Bank (BB) Governor Atiur Rahman in the chair.
"The board of directors has given approval to launching of such re-financing scheme to facilitate the jute industry," a BB senior official told the FE, adding that only state-owned jute mills would be entitled to get such facility.
The central bank will issue a circular in this connection shortly, the BB official said, adding that the jute mills would be able to receive loan from the state-owned commercial banks.
Currently, 16 state-owned jute mills are operational, four have been leased out and four are closed.
BB asks banks not to finance land buying
The Bangladesh Bank (BB) has asked the commercial banks to stop financing for land purchase as increased flow of credit in the unproductive sector is adversely affecting the economy.
The central bank has taken the measure after imposing restrictions on purchase or lease of fixed assets including land by the commercial banks to protect public interest.
"We've instructed the banks not to invest in or finance any land purchase in line with the existing bank companies' act," a BB senior official told the FE, adding that the prices of land have abnormally increased following higher demand of the fixed asset.
"We've found that investments in land purchase have increased abnormally. Such increased flow of loans in the unproductive sector has negatively affected the national economy," the central bank official noted.
The central bank issued a circular in this connection Tuesday and asked the chief executives and managing directors of all commercial banks to comply with the instructions properly.
On January 25 this year, the BB imposed restrictions on purchase or lease of fixed assets including land by the commercial banks to protect public interest.
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