Govt’s reliance on indirect taxes propels inequality in society: CPD

Staff Reporter  :
Eminent Economist Dr. Debapriya Bhattacharya said as government heavily depends on indirect taxes to generate revenue eventually creates further inequality in the country.

The proposed budget of the financial year of 2023-24, severely compromised the credibility of various estimates such as inflation, growth rate, exchange rates, revenue generation and others while no effort was seen to appease the poor in the budget speech, said Dr. Debapriya, the distinguished fellow of theCentre for Policy Dialogue (CPD), on yesterday.

He was presenting the key-note paper on Wednesday at an event titled “National Budgets in Bangladesh – Myths and Realities” jointly organized by CPD and Citizen’s Platform for SDGs, Bangladesh.

Addressing the poor percentage of direct tax, he showed that over the years the share of direct tax is only one-third of the total tax collection while the rest 66 percent come through the indirect taxes.

“Since 2014, the normal pace of tax collection has gone down. Absence of democratic accountability
results in massive shortfalls in tax collection.”

“The money has been smuggled out, or taxes have not been paid. That is why indirect taxes still account for two-thirds of tax collection,” Debapriya observed who is also theConvener, Citizen’s Platform for SDGs, Bangladesh.

Speaking about indirect taxes, Dr. Debapriya said that in indirect taxes the contribution of rich and poor is equal. More than one-third of people are paying VAT. Reliance on indirect taxes and VAT is fundamental in economic management, he added.