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How smart solutions to tax reform can help develop infrastructure

Bangladesh's public sector faces serious challenges. Poor infrastructure is one of the main factors that hold back economic growth. 

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Strengthening the tax base in Bangladesh

Benefits and costs of Strengthening Bangladesh’s VAT structure 

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Fiscal Management & Revenue Mobilization

Government tax revenue is equal to just 11 percent of the size of the entire economy in Bangladesh. So despite the fact that the country has great potential to boost revenue earnings, much of it goes untapped. Over the next five years, the government aims to increase this tax-to-GDP share to 14 percent.

When it comes to strengthening the tax base, the VAT is a crucial issue, because revenues collected from it and income tax combine to account for 70 percent of all tax revenue. 

Proposed Strategy

Strategy Takas of benefits per taka spent
Reform VAT and automate collection 6
Strengthening the tax base in Bangladesh image

Strengthening the tax base in Bangladesh

Research by Bazlul H. Khondker, a professor of Economics at the University of Dhaka, and Biplob Kumar Nandi, a senior lecturer of economics at East West University, find that modifying the VAT and its collection is one of the most promising strategies to mobilize more resources for government.

Although Bangladesh has maintained a sustained growth rate of over 6 percent in recent years, tax revenue-to-GDP ratio remains at around 10 percent, one of the lowest in the world."

- Biplob Kumar Nandi & Bazlul Haque Khondke

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How smart solutions to tax reform can help develop infrastructure image

How smart solutions to tax reform can help develop infrastructure

In a series of op-eds published in The Daily Star and Prothom Alo, Bjorn Lomborg outlined the key findings of the path-breaking research produced by the Bangladesh Priorities project.

When it comes to strengthening the tax base, the VAT is a crucial issue, because revenues collected from it and income tax combine to account for 70 percent of all tax revenue." - Bjorn Lomborg

Read more in the Daily Star

What do you think?

Mobilizing more resources for government could help improve many public services and goods, including the massive infrastructure needs of the country. But is mobilizing more government resources the best way to help Bangladesh? We want you to continue the conversation about how to do the most good for every taka spent by participating in our Facebook poll. 

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