Staff Reporter :
Weak growth in revenue collection could leave the next elected government with little room to substantially revise the budget it inherits, an economist warned on Monday.
“If we fail to accelerate revenue mobilisation, much of our future development will be seriously hindered,” said MA Razzaque, chairman of the Research and Policy Integration for Development (RAPID).
Speaking at a seminar in Dhaka on socioeconomic priorities for the incoming government, Razzaque said the current revenue trend represents one of the biggest risks for the new administration, sharply constraining its ability to introduce major fiscal changes.
He said tackling long-standing underinvestment in sectors such as health, education and social protection should be a key focus when the new government presents its first budget, expected between February and June.
However, he cautioned that sluggish revenue growth would make meaningful departures from the previous budget extremely challenging.
Bangladesh’s tax-to-GDP ratio has fallen to around 7 percent, which Razzaque described as alarmingly low. The figure is well below those of comparable countries, including India, China, Nepal, Malaysia, Cambodia and Thailand, and far short of the average for lower-middle-income economies.
Citing studies by the International Monetary Fund and the World Bank, he said a tax-to-GDP ratio of at least 15 percent is needed to sustain economic growth and achieve the Sustainable Development Goals.
While reaching that level within the next three to five years is unrealistic, he stressed that efforts must begin immediately.
Failure to boost the tax-to-GDP ratio, strengthen domestic resource mobilisation and sustain reform initiatives would place severe strain on fiscal sustainability, he added.
Razzaque also emphasised that revenue collection is essential not only for financing development but also for reducing inequality through effective fiscal and redistribution policies.
Proper taxation of higher-income groups, alongside spending targeted at poorer populations could help build a more equitable society.
Despite inequality being a central issue in the movement that led to the fall of the previous government, Bangladesh has yet to adopt credible policies to address it, he said.
Citing an upcoming RAPID study, Razzaque noted that 54 percent of the country’s wealth is held by just 1 percent of the population, warning that such concentration poses a serious threat to social stability.
