Next govt must focus on digitisation, tax reforms

The next government should set a clear digitisation goal to help Bangladesh become a developed nation and promote modernisation and sustainable growth across all sectors, economic experts said yesterday.

They also recommended expanding the VAT base to include businesses currently outside its scope and creating an integrated system to simplify tax payments, adding that higher revenue collection would help reduce the country’s revenue deficit.

The statements were made at an event on revenue challenges and solutions in Dhaka, jointly organised by Voice for Reform and the Bangladesh Research Analysis and Information Network.

Snehasish Barua, managing director of SMAC Advisory Services Limited, said the National Board of Revenue (NBR) recorded a 14 percent growth in revenue collection in the first half of the current fiscal year (FY) but still fell short of the target by a staggering Tk 46,000 crore, or nearly 10 percent.

“The revenue board has failed to meet its annual target for at least a decade. In the July-December period of FY2025-26, NBR collected Tk 185,229 crore,” he added.

Barua pointed out that while the proposed new pay structure suggests salary increases for government officials and employees, development spending has gone down, and operating expenses have risen.

“To overcome the revenue deficit, the government must adopt short-, medium-, and long-term plans,” he said.

While the proposed new pay structure suggests salary increases for government officials and employees, development spending has gone down, and operating expenses have risen

Barua also stressed the need to balance tax sources. “Like developed countries, direct taxes should make up half of total revenue and indirect taxes the other half. To increase revenue, reliance on customs and VAT must be reduced, and income tax should be increased,” he said.

M Masrur Reaz, chairman and chief executive officer of Policy Exchange Bangladesh, said, “Every country has foreign debt, so nothing is surprising about that. The problem arises when the debt grows excessively.”

He added that since 2017-18, the foreign debt rate has been rising, causing problems for the economy.

“In March of the FY2024-25, foreign debt interest increased by 23 percent compared to the previous year,” Reaz said. “Even more alarming, foreign debt interest in 2025 has risen 246 percent compared to 2021.”

Rashed Al Mahmud Titumir, professor of Development Studies at the University of Dhaka, said that often, some unrealistic figures are presented about the country’s economy, but no clear strategy, policy, or roadmap is shown to achieve them.

He stressed the need for a culture of tax payment among citizens. “Simply increasing government spending without improving its quality does not strengthen the economy,” he said. “Without increased economic capacity, incomes will not rise, and without higher income, collecting taxes from people is impossible.”

Titumir also pointed out problems in the current system. “There is a lack of fairness in the revenue system, and people are losing trust in it. At the same time, employment and social security must be given priority,” he said.

He suggested ways to boost employment, saying, “Investment in labour-intensive sectors, revival of small and medium industries, and development of rural infrastructure must be prioritised.”

Masud Khan, chairman of Unilever Consumer Care Ltd, said, “It is essential to clearly show citizens the benefits they receive from paying taxes. When people see the direct benefits, they are more willing to pay.”

Economist Jyoti Rahman, presenting the keynote paper, said that the development budget, infrastructure projects, and power purchase agreements need to be reviewed. This will cut unnecessary spending and make development activities more effective.