Ending the era of ‘judge and jury’ taxmen

Bangladesh's economy has grown significantly in recent decades, becoming more diversified and less reliant on foreign aid. Tax revenues have also increased, reflecting this growth. Yet, the role and structure of the country's revenue officials have remained largely unchanged for decades.

Revenue officials have long held dual roles – both making the rules and enforcing them — and this has led to excessive discretionary power.

If police officers are allowed to write the rules governing when they can use firearms, they would make rules to suit their interests. It's no different with revenue officials – they often misuse their authority.

Another real-world example is: When a taxpayer files their return, a deputy commissioner of taxes might arbitrarily reject the declared expenses. A taxpayer could be told, "I don't believe you made four trips abroad for business," and have their claims disallowed. There's an underlying suspicion toward taxpayers, and officials often act aggressively.

In another case, tax officials simply tell individuals or companies: "You paid Tk50 in tax last year – this year, you must pay Tk60," without considering whether the taxpayer's income has increased.

Such unchecked discretion creates space for under-the-table deals between tax officials and taxpayers, leading to significant informal revenue losses for the government.

The decision to separate tax policy from enforcement is expected to change that. Officials in charge of tax collection will no longer be involved in policymaking, and vice versa. This will empower both tax officials and taxpayers, providing clearer channels for appeal and oversight.

Taxpayers who feel harassed will now have the opportunity to seek redress from the policy division.

While both new divisions will still be staffed mainly by revenue officials, the policy wing is expected to include input from independent experts and representatives from the private sector – a move aimed at ensuring greater transparency and fairness in the tax system.

Muhammad Abdul Mazid is former NBR chairman and a reform commission member.