A laundry list for the new NBR chairman
On 14 August, the government appointed Financial Institutions Department Secretary Abdur Rahman Khan as the Chairman of the NBR. A number of urgent actions await him at his new office
At the onset, we congratulate you, Mr. Abdur Rahman Khan, for having been appointed as the new chair of the National Board of Revenue (NBR). It is like a homecoming for you as you joined this very institution 30 years ago, but later took lateral entry into BCS Administrative Service, where you made your way to the top, a secretary to the government.
In the aftermath of the July Revolution, the prevailing situation in bureaucracy and beyond, is still very volatile. It seems that the Bangladesh secretariat has turned into a wish-granting genie, as everyone is approaching with endless wishes, rather than three.
Maybe, physically you are far from the chaos in your office in Agargaon. But, you should make a note of it: If changes are not visible in your administration, people will raise their voice to remove you sooner rather than later.
Which changes are needed now? We have a brief list of four laid out for you.
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Reshuffling the top brass
The first one is your first line of defense. A reshuffle among members of the board is obvious. These are the people who brought down NBR to the toe of the former chairman and his associates.
Since independence, the NBR chairs have always come from BCS (Administration) and headed the organisation composed of Taxation and Customs and Excise cadres. This has been a phenomenon these two cadres never accepted, but never could resist.
The highest spot a taxation or customs cadre officer would climb is a member of the board, equivalent to an additional secretary, whereas their administration cadre friends would become secretaries. NBR officers murmured about it on different forums but eventually learnt to live with this discrimination.
Big names like Akbar Ali Khan and Dr Sadat Hussain were chairman back in the 90s. But the standard and statute of the chief have only gone from low to low in the recent past. For instance, one former chairman allegedly got his son enrolled in Dhaka University under a disabled quota, whereas the boy is a regular healthy person.
This same official reportedly formed a small group of like-minded officers and ran the administration through that coterie. Anyone deviating from his design would be handed in a transfer to the furthest office outside Dhaka, coupled with a red mark in the confidential report and/or a halt in the promotion prospect.
Alas, Mr Khan, none from your own cadre - taxation, was seen in the protests. The cadre is so hunchbacked that it cannot look up at the sky with a new sun rising. Do not tell us you do not know what happened.
A first secretary (deputy secretary equivalent) used to run the show. He controlled the whole NBR administration for four years, and the general, Mr Khan, bowed down to him despite being an Additional Secretary equivalent.
Your first line of defence, your members, are collectively responsible for this situation. They quietly witnessed the turning of a strong organisation into a fragile one, put personal gains over public interests, and shamelessly gave in to the tyranny of administrative cadre representatives. This collective failure must be admitted and immediately addressed.
Rewrite the rules
Revenue earnings rise every year; the lofty targets set in budget documents are almost never reached, but there is sizable growth. The question remains, though, whether the full growth potential is exhausted, or the rise is a natural outcome of economic growth.
Since revenue growth is higher (in some years twice as much) than GDP growth, NBR can defend itself. But it cannot when we bring the Tax-GDP ratio to the table. With 7.30%, we are behind Nepal, Sri Lanka and India among South Asian nations, and one of lowest in the world. FY25's projection is 9.7%, something we had nine years ago. Are you up for it?
You are in a classic catch-22 situation here. With eroding exchequer in possession, the government will eye NBR collection, whereas NBR will need more development work for greater collection.
Escape from this paradoxical picture is not, however, impossible. Beside short-term measures (like making the ports fully functional), you also need to rewrite the rules, shrink the exemption provisions of tax law, for which an astounding amount (Tk125,813 crore in FY21 per an NBR research work on tax expenditure) slips out every year.
Please initiate some dialogue and present some papers to the honourable finance advisor for his understanding of the loopholes of law.
Re-engage with the AG office
It is common wisdom that many NBR cases are left in high court, which, if the verdict comes in favour of the government, can flood revenue targets of any given fiscal year.
In reality, however, it never happens. By the time a few cases are resolved, a larger number of newly disputed demands make their way to the High Court. Hence, the receivables continue to rise year after year.
Create a new brigade of officers to engage, anew, with the AG office. The Honourable Chief Justice is new and pledge-bound to bring about changes, but perhaps he is yet to know how formidable the revenue size is awaiting his kind attention.
Again, please let him have some paperwork to fathom the volume.
Rebuild, reform, reinforce
NBR's year-by-year revenue collection tally shows that the highest growth in the millennium was seen in 2001-02 (27.98), 2007-08 (27.45) and 2010-11 (27.98). Why could it never attain such altitudes ever again?
Lack of political will, leadership failure, frequent policy shifts, faulty administration, corporate tax fraud, reluctant individual payers, Covid strikes—what is it? One needs to dig deep to form an opinion on the decade-long failure.
For you, it is far more than digging. In post-revolutionary Bangladesh, you are entrusted with scaling up the fiscal health of the nation.
"You [journalists] probably do not know, but there is nothing left in finance, yet we are keeping the economy running," said the finance advisor. Just like your advisor, Mr Khan, you also have to deal with 15 years of mess every day.
Wishing you good luck!
Al Mamoon is a member at the Pacific Council on International Policy, California, and a former commercial counsellor at the Los Angeles Consulate. He can be reached at amamoon42@gmail.com.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.
