Over the abrupt issuance of the government ordinance abolishing the National Board of Revenue (NBR) and creating two separate divisions such as revenue policy and revenue management, Transparency International Bangladesh (TIB) has expressed concern. It warns that this move risks placing revenue management under the control of the executive branch. The separation move ultimately fails to allow the minimum degree of autonomy that revenue management should enjoy from the executive, though the initiative was undertaken based on a logical rationale to ensure policy independence, transparency, and accountability, increase the tax-to-GDP ratio, and achieve revenue collection targets. The interim government’s decision to bypass the recommendations of the advisory committee formed to reform the NBR and to issue the ordinance in haste has raised various questions. TIB calls for immediate and appropriate amendments to the ordinance in order to uphold the core objective of revenue system reform.
Indicating the demand for the separation, TIB Executive Director Dr. Iftekharuzzaman stated (in a press release issued), “There has been a longstanding demand to separate policy formulation and implementation in the revenue sector to establish transparency and accountability. Because keeping these two crucial functions within a single structure has often led to conflicts of interest, collusive corruption, bureaucratic delays, and failures in meeting revenue targets… The most recent advisory committee on revenue reform, along with various stakeholders and experts over time, has recommended the decentralization of revenue management.” He further says that we want to consider the interim government’s policy-level initiative positively in this context, but it raises serious questions as to why the ordinance was issued bypassing the recommendations of the advisory committee formed specifically for revenue reform and in whose interest these recommendations were ignored in the formulation of the ordinance.
Putting forward skepticism about the outcomes, Dr. Iftekharuzzaman asks, “How much objective, knowledge-based analysis has been undertaken to assess whether this arbitrary change will indeed achieve the core objective of increased revenue collection?” indicating the flaws in the separation, TIB Executive Director said that the ordinance has effectively turned it into an institution under the control of the government, particularly the Ministry of Finance, in the name of decentralizing the Revenue Board. A country’s revenue policy and management should, according to international best practices, be handled by an independent agency, board, or authority with legal safeguards to ensure it remains free from political and administrative influence. But disregarding the core recommendation of the advisory committee, the country’s revenue system has now been transformed into two departments under the executive branch.
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Indicating the possibility of irregularities, Dr Iftekharuzzaman says that there remains ample scope for irregularities, including corruption and conflicts of interest, in the formulation and implementation of tax policies. He also says. “It is not unreasonable to assume that these risks may even increase. To achieve the expected revenue targets and ensure transparency and accountability in revenue management, there is no alternative to placing the two newly formed departments beyond the reach of political and administrative influence through legal safeguards. This decision by the government has already fueled existing inter-cadre tensions—something that cannot be ignored.”
By emphasizing that simply decentralizing the revenue system will not automatically lead to the desired outcomes, the TIB Executive Director said, “It is well known that irregularities and collusive fraud in revenue assessment and collection are among the major means of tax evasion in Bangladesh. Despite various initiatives over the years, we have seen that the processes of filing income tax returns and collecting VAT are yet to be fully digitized; harassment and corruption have not declined; invoice fraud remains unchecked; tax evasion and money laundering continue unabated; and the tax-to-GDP ratio has not increased…”. He further says that the government has, amidst all this, once again Institutionalized control under the guise of separating policy and administration through stripping the Comptroller and Auditor General (CAG) of the authority to audit revenue bureaucracy resisting reform.
TIB calls for the immediate suspension of the government ordinance and urges for its comprehensive reformation through an independent assessment of its potential and risks. Highlighting the importance of ethical standards, Dr. Iftekharuzzaman further says that just passing an ordinance or creating separate departments for policy formulation and implementation will not yield the expected outcomes, and, alongside keeping the revenue departments outside the control of the executive branch, it is vital to uphold ethical standards among personnel in revenue administration, promote automation, and actively focus on direct tax collection.
Transparency International Bangladesh
MIDAS Center, Dhaka
Bangladesh
Email:advocacy@ti-bangladesh.org
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