Revenue Reform Remains Unimplemented

Throwing the revenue reform into the gutter Is not silly but a serious matter.

It appears that the ruling party has kept its words by not implementing the revenue reform. At the heart of this reform is the separation between revenue policy department and revenue implementation department. Past interim govt even made Revenue Policy and Revenue Administration Ordinance 2025 (see http://bdlaws.minlaw.gov.bd/act-details-1537.html),which is in line with the IMF reform list. Incumbent Finance Minister before the election said his party would support independence of the central bank but oppose splitting the NBR into two bodies.

What does this new ordinance contain? Govt will appoint people to revenue policy department. Tax Appellate Tribunal and Customs, Excise and VAT Appellate Tribunal will be under the auspices of revenue policy department. Its jobs include formulation of tax policy, raising/lowering taxes, tax law amendment, evaluation of tax management, negotiations on international customs agreement, research, revenue forecast and estimation among other things.

Staffs of revenue administration department will be drawn from BCS cadres. Revenue administration is tasked with implementation of various tax laws and regulations, implementation of international customs agreement, implementation of international agreement on abolition of double taxation, staff management, making and implementing budget for the department, initiating tax awareness building campaign,undertaking audit and surveillance programs etc.

The splitting of the NBR will make the policy department's influence weaker over the administration department. At present NBR could impose excise duties or raises taxes in the middle of the year in a bid to meet the revenue target. The move ultimately increases cost of doing business. Many investment initiatives sustain cost overrun because of unpredictable nature of tax policies. It is anticipated that NBR reform would bring predictability in tax policies not raising cost of businesses in a given year.

And most importantly the reform may put an end to policies driven by political vendetta. The NBR Order of 1972 makes NBR a powerful institution. If one reads the clause #4 of The NBR Order, then one can have some idea about the power wielded by the NBR. The clause states that govt can make rules at its whims and NBR officers can take actions whatever they wish before the rule is actually made. Those actions before the rule cannot be put under scanner later (see The NBR Order 1972, https://nbr.gov.bd/uploads/acts/9.pdf). In the past we saw how the NBR was used to harass the political opponent. Fear is that outrightly throwing the idea of splitting the NBR may continue political vendetta driven actions.

Revenue reform will not only put restraint over overwhelming power of NBR,it will also bring the much needed predictability about revenue policymaking. And it will benefit both business and individual alike in terms of giving idea about the vernacular cost. At the same time, it will improve the political environment by ending use of NBR as a docile instrument to harass others. But by not making the ordinance into a law , govt throws cold water into such bright possibilities. I hope govt will reconsider its decision.