One of the long-standing problems of economic management of Bangladesh has been related to its taxation regime, and income taxation in particular. Government tax revenue equals about 11 per cent of gross domestic product (GDP), one of the lowest tax/GDP ratio in the world. Of the total tax revenue about 30 per cent constitute direct taxes (income-based taxes) and less than 2.0 per cent of the population-pay income tax. The author with his long career spanning over 30 years holding numerous senior positions in the tax administration including as member (tax policy) of the National Board of Revenue (NBR) and also for a brief period in the public administration, is immensely qualified to give us an insider view of how the tax administration operates and the challenges it faces to overhaul and streamline the system. I have reasons to believe that the book is the first of its kind in Bangladesh.
While the book provides us an interesting, and quite often even an entertaining account of the challenges of income tax (including corporate taxes) collection in a tax system which is riddled with a wide range of exemptions, incentives and special regimes with discretionary power given to tax collectors to interpret them, it also provides a brilliant narrative of his life's journey from childhood to his post-retirement life. The author is also a keen observer of cultural, social and political events that he encountered both at home and on his numerous trips abroad. He does not shy away from providing his very frank personal opinions on those events.
The book can be broadly divided into three sections containing 44 chapters. The First section, comprising chapters 1-8, provides his life's journey from early childhood in a rural Bangladesh setting in a costal district now called Patuakhali to his journey to the capital city of Dhaka to complete his higher secondary education at Dhaka College, then onto Dhaka University to complete his Bachelor's and Master's degrees in Economics. He vividly describes the highly charged, quite often even confrontational and violent political environment on the campus and also in the hall of residence (Salimullah Muslim Hall) that existed at the time. It was the time of Pakistani military dictator Ayub Khan who ruled the country at that time. He also provides his insightful analysis of the process of decay set in motion by the policies of Ayub Khan and his successor Yahiya Khan which, in his words "drove the last nail on the coffin of Pakistan heralding a new nation long in the throes of birth'' (p80).
This section also provides a detailed picture of a child growing up in rural Bangladesh marked by widespread poverty and deprivation and also social mores and taboos of the time. Quite vivid and also in an entertaining way, he describes his life at Dhaka College and his student life at Dhaka University, including life in Dhaka city at that period. In that way it provides a historical backdrop to both Dhaka as a city and life in that city in the 1960s.
The Second section, comprising chapters 9- 36, deals with the central focus of the book detailing his life's journey as a taxman. After a brief stint at a public college (Jagannath College) as lecturer, he joined the then Pakistan Taxation Service in 1970 (an elite group of taxation officials) heralding his career as a taxman. He had to undergo a training programme in Lahore in Pakistan, It was a very critical as well as challenging time for a Bengalee to be in the heartland of Pakistan (Lahore and also the Punjab, to be precise) as it was almost on the verge of break-up heralding the birth of the new nation of Bangladesh the following year. The author was pretty lucky to return home just three months before the liberation of Bangladesh which almost coincided with the start of his career as a taxman in the new nation of Bangladesh.
Like most other civil servants, he also had to move around the country with perennial problems to find accommodation, school for children and transport to commute to workplace. He provides some very personal experiences dealing with those situations. He also provides a fair amount of historical backdrops to the places he worked like in Khulna. However, he spent most of his career as a taxman in the capital city, Dhaka where he held various senior position rising to become a member of the NBR. He also visited a number of countries which include Japan, Singapore, some Gulf states, the USA and some European countries in connection with taxation matters. He was a very keen observer of societies in those countries and expressed his views in a very candid fashion. He also recorded some of his personal encounters with diaspora Bangladeshis in Europe and the ordeals and emotional trauma they face.
He recounts how personal ambitions and jealousies in the civil bureaucracy, including the taxation department, seriously disrupt and discourage officials to perform their duties diligently. The author himself fell victim to personal vendetta on many occasions during his working life - even facing hurdles to rise through his career ladder. In a highly structured society based on status, like in Bangladesh, there is very little room to take personal initiatives or to be an agent of change in a bureaucratic system marked by incompetence and corruption. There is an all-pervasive culture of workplace bullying by senior staff and such a practice is the norm which demoralises and causes distress to bullied staff with serious consequences affecting efficiency and productivity.
The book clearly identifies the core problem with the income taxation regime which is open to opportunities for striking bargains between taxpayers and tax collectors over the distribution of economic rent arising from manipulating the taxation system. In other words, the system is riddled with corrupt practices which confers benefits to both the taxpayer and the tax collector and that has guaranteed the relative stability of the system without creating any vibes. However, it must be remembered that this is not an isolated phenomenon but an integral part of all-pervasive culture of corruption that is permeates through all levels of the society. This is a systemic problem.
No wonder any suggestion to reform the income taxation system faces a very stiff opposition form the vested quarters as, in author's words, "a very modest income tax reform badly needed for revenue itself caused national furore, raising eyebrows in vested quarters'' (p267). The author, however, was instrumental in steering a reform package in 1992 to expand the bureaucratic structure with increased levels of human resources to give a boost to income tax revenue. But there is no suggestion in the book whether such a reform measure fulfils the "efficiency criteria'' of taxation or achieved its objectives. Also missing in the book is whether any attempt was made to reform the systemic problems within the taxation system itself which remains the core of the problem. However, he did allude to the built-in inertia in the NBR where a very senior civil servant, generally from the administrative service with no background in tax collection, is appointed as chairman just for a couple of years or some times even less just before retirement is due. This sounds like a pre-retirement warm-up for the official as he (it also appears that it is always a he) is elevated to the position of chairman of the NBR before he is due for retirement. As such, chairman has no time or appetite for initiating or undertaking any reform measures of the taxation system but remains singularly focused on achieving the revenue target or carrying on the business as before.
The Third section comprising, chapters 37-44, covers the writer's post retirement life or not so a retired mandarin. In Bangladesh, a senior retired civil servant can have many re-incarnations and the author's post-retirement life is not an exception to that. He became an adviser to a commercial and investment bank which has an overseas affiliate in Nepal. The bank in question is a private-public partnership. He was now not only exposed to the world of high finance but also bank frauds and tax evasion which he details in the book. After two years there he moved to the Reform in the Revenue Administration (RIRA) project as the national team leader to work alongside a group of consultants from an international consulting firm. RIRA was, in effect, considered a taxation reform project. But what I gathered from the book, it appears to me the project was designed to give IT-based technical fix to a dysfunctional taxation system. He expressed his concerns about some of the consultants' technical competence in undertaking the tasks involved in it but refrains from providing any comments on the success or failure of the project to achieve its objectives.
After completing his contract with RIRA, the author moved to Canada with the intention to live there where his two sons and their families live. During his residency-qualifying period there, he made himself familiar with the Canadian taxation system and made some suggestions for improving the income tax collection system in Bangladesh. One may consider such a well-intentioned effort as more an academic exercise than a practical one in the context of Bangladesh bureaucracy's resistance to change. But for personal and family reasons he ditched the idea of permanently settling in Canada and returned home.
On return home, in 2012, he was persuaded by the then Chairman of the NBR to join a team of facilitators comprising senior tax officials and industry representatives to undertake tax dispute resolution under the scheme known the Alternative Dispute Resolution (ADR). The purpose of the scheme was to quickly resolve tax disputes bypassing the highly time-consuming and expensive normal judicial system. In the usual fashion, the ADR faced opposition from various branches of the bureaucracy, including the NBR itself, and by 2015 he left his assignment with the ADR. That was the last public service assignment he undertook till now.
The author clearly demonstrates that the taxation system has remarkably proved to be very resistant to any fundamental change despite some attempts to streamline the system. The reasons why the system is so resistant to change is not far to seek. The civil service in Bangladesh is largely a huge welfare system with significant perks bestowed on civil servants such as concessional official housing and private residential land grants, official vehicles, easy access to bank loans, even concessional loans for private vehicles, to name a few. Even then many civil servants use their official power and position for gaining further personal enrichment. That is, in other words, they resort to corruption. The result is a civil service structure that has become a breeding ground for incompetence and ineffectiveness making it completely resistant to any change. The civil service in Bangladesh simply can not be relied upon to carry out simplest functions of government such as the collection of taxes, enforcement of economic regulations, repair of roads and many other routine functions. These are harsh words but not unwarranted. The book, therefore, is a must read for those who want to change such an appalling system and will also enable them to come to grips with the deeper rots within the system.
Muhammad Mahmood is an independent economic and political analyst.
