Bangladesh remains caught in a “low-level revenue equilibrium trap” characterised by a persistent low tax-GDP ratio, systemic failures, and weak political commitment to reform, speakers said at a pre-budget policy dialogue on Saturday.
The dialogue titled “Revenue Mobilisation: Challenges and Opportunities” was organised by the Power and Participation Research Centre (PPRC) at the Bangladesh Shilpakala Academy in Dhaka, bringing together policymakers, private-sector leaders, development partners, and researchers.
PPRC Executive Chairman Hossain Zillur Rahman, who delivered the presentation, said revenue underperformance in Bangladesh is rooted in systemic failure.
“From a narrow tax base shaped by political economy and exemptions to deeply entrenched ad hoc practices and weak political commitment, tax reform must focus not only on policy design but also on implementation credibility, sequencing, and institutional accountability,” he said.
He stressed that revenue reform should align with growth promotion and social progress simultaneously, while addressing the reality of ‘hoirani’ (harassment), which has become “an existential challenge for citizens and businesses alike.”
Adviser to the Prime Minister on Finance and Planning Rashed Al Mahmud Titumir, who attended as chief guest, said tax reform cannot succeed without representation, accountability, and political legitimacy.
“A culture of patronage has weakened the integrity of the tax system. Citizens lose motivation to pay taxes when governance appears unfair or unaccountable,” he said.
He called for advancing digitisation, cashless transactions, and risk-based auditing as essential pillars of modern tax administration.
NBR Chairman Md Abdur Rahman Khan, present as special guest, explained his agency’s efforts to digitise the revenue process to reduce discretionary powers and build taxpayer trust. He said the emphasis is on expanding the tax base and moving away from words like ‘jaal’ (net), which sends a wrong signal to citizens.
He outlined concrete administrative commitments, stating that “all tobacco products will be brought under stricter regulation through production-counting machines before entering the market.”
“QR and AR code systems will also be introduced so consumers can easily verify whether taxes have been properly paid on cigarette products and report irregularities when necessary,” he added.
‘Radical reform needed’
Policy Research Institute Chairman Zaidi Sattar said Bangladesh now needs radical tax reform informed by evidence, not incremental adjustments.
Gayle Martin, Operations Manager at the World Bank Bangladesh Office, warned that low tax-to-GDP ratios leave governments with dangerous trade-offs, often forcing cuts in health, education, and social protection.
“VAT exemptions must be rationalised transparently if Bangladesh wants sustainable revenue growth,” she said.
Representing the private sector, Apex Footwear Managing Director Syed Nasim Manzur said good taxpayers should receive compliance benefits, while persistent non-compliance must face meaningful penalties.
“Tax reform must incentivise good behaviour instead of discouraging investment. Greater transparency and accountability within institutions like NBR are essential for restoring trust,” he said.
Professor Shafiun N Shimul of the University of Dhaka’s Institute of Health Economics said sin taxes on tobacco and alcohol can become powerful instruments for both public health and revenue generation.
“The Philippines has already demonstrated how higher tobacco and alcohol taxes can significantly increase state revenue while expanding health coverage. Our simulations suggest Bangladesh could potentially generate around Tk 85,000 crore through stronger tobacco taxation reforms,” he said.
Additional Commissioner of Taxes Md Nurul Amin said a reference-based digital database can significantly strengthen tax verification and reduce false reporting.
“Monitoring gaps are already costing the government substantial revenue – even in cigarette pricing, where higher market prices fail to translate into public benefit,” he said.
The session was chaired by PPRC Executive Chairman Hossain Zillur Rahman. Mamun Rashid, Simeen Rahman, Dr AKM Nuruzzaman, Nurul Amin, Fazlul Haque, and Abdul Huq also spoke at the event.
