PRI calls for urgent Tax Reforms to address Bangladesh’s economic challenges


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PRI calls for urgent Tax Reforms to address Bangladesh’s economic challenges

BM Report:

The Policy Research Institute of Bangladesh (PRI) has urged the government to implement urgent tax reforms to address the country’s growing economic challenges. In a briefing entitled “IMF and BD” held on Tuesday in the capital, PRI highlighted the need for increased revenue mobilization to counter rising living costs, slowing revenue growth, and mounting debt burdens.

Executive Director of PRI Ahsan H. Mansur – and the Director of the PRI Study Centre on Domestic Resource Mobilisation Mohammad A. Razzaque shared their insights and thoughts on this crucial issue.

PRI’s analysis indicates that Bangladesh’s economy is at a crossroads, with ordinary citizens facing significant financial strain and the government grappling with revenue shortfalls, escalating debt costs, and dwindling foreign exchange reserves.

To address these pressing issues and restore macroeconomic stability, PRI emphasizes the importance of tax system reforms and enhanced revenue collection. While acknowledging some positive steps taken by the government, such as the withdrawal of certain tax exemptions and the introduction of Electronic Fiscal Devices (EFDs), PRI underscores the need for more comprehensive and far-reaching measures.

PRI advocates for a prioritization of the following policy reforms:

Boosting Revenue from Personal Income Taxes: PRI’s research suggests that increasing personal income tax collection could stimulate economic growth in the medium term and contribute to poverty reduction.

Further Reduction of Tax Exemptions: While the government has taken some steps to eliminate exemptions, PRI maintains that more needs to be done. NBR’s own estimates indicate that exemptions from direct taxes alone amount to approximately 3.5% of GDP.

Reimplementation of the Original 2012 VAT Law: PRI advocates for a return to the original 2012 VAT law, as the current amended VAT system introduces numerous distortions and inefficiencies. Adopting the original law is projected to increase revenue by 0.6% of GDP annually and simplify administration.

PRI emphasizes the urgency of these reforms, stating that further deterioration of macroeconomic conditions must be averted. The proposed tax reforms aim to strengthen the government’s fiscal position, enable effective management of public finances, and support sustainable economic growth.


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