'What does the govt do with our tax money?' Businesses question spending priorities

Business leaders today (7 May) questioned how the government spends taxpayers' money, criticised rising inefficiencies in public expenditure and demanded sweeping reforms in tax administration, while Prime Minister's Adviser on Finance and Planning Dr Rashed Al Mahmud Titumir promised greater transparency from the next national budget.

Speaking at a pre-budget discussion organised by the Institute of Chartered Accountants of Bangladesh (ICAB) and the national daily Financial Express, business leaders expressed frustration over what they described as wasteful spending, poor policy support for industries and a revenue system that continues to burden compliant taxpayers while failing to expand the tax net.

Bangladesh Textile Mills Association (BTMA) President Showkat Aziz Russell directly questioned the government's spending priorities and called for a dedicated monitoring cell to ensure accountability in public expenditure.

"You catch people and put them in jail for failing to pay taxes. But what do you do with our tax money?" he said.

"The way the government enforces tax collection, there should also be accountability over how those funds are spent."

Russell alleged that government expenditure has been growing faster than revenue collection while development priorities often fail to reflect economic realities.

"You build bridges where there are no roads and then tell us there is no money," he said. "This trend must change."

He also urged the government to clearly disclose in the upcoming budget what percentage of spending would be allocated to industry, healthcare and education.

In response, Adviser Titumir said taxpayers would be able to see how their tax money is being spent through future income tax receipts.

"When citizens pay taxes in the future, they will receive an acknowledgement receipt clearly stating what percentage of the budget has been allocated to education, health and social safety programmes," he said.

"This will allow citizens to ensure accountability of the institutions spending public money."

Russell complained, "Businesses are collapsing, factories are shutting down and the government is failing to ensure a business-friendly environment."

Responding to concerns over low tax compliance, Titumir argued that Bangladesh's weak tax culture stems from a breakdown in trust between the state and citizens.

"People will pay taxes only when they believe they are receiving services in return," he said. "If citizens do not think their money is being used properly, why would they pay taxes?"

He said Bangladesh's tax-to-GDP ratio remains among the lowest in the world at around 6.6%, blaming political patronage, tax exemptions for connected groups and widespread tax evasion for the situation.

"The biggest problem is the patronage-based system where politically connected groups receive various benefits, including tax advantages," he said.

According to the adviser, the government wants to create a tax system conducive to reducing direct interaction between taxpayers and tax officials while increasing transparency over public expenditure.

Titumir also said the government does not plan to raise tax rates, but instead aims to increase domestic resource mobilisation through higher economic activity, employment generation and expansion of the formal economy.

He added that increasing direct taxes ultimately depends on creating jobs with taxable incomes.

"The only way to increase direct taxes is through employment growth and wages that create taxable income," he said.

The adviser said the government is also working to integrate the informal sector into the formal economy through digital financial systems, SME reforms and incentives for cottage and small industries.

Bangladesh Bank has already started discussions with banks under the "One Village, One Product" initiative to support small entrepreneurs through special financial packages, he added.

Titumir also highlighted plans to build a digital public infrastructure (DPI) under the concept of "One Citizen, One Digital Wallet", citing family cards and farmers' cards as examples of efforts to bring more citizens into formal financial networks.

ICAB President NKA Mobin said the size of the next national budget could reach nearly Tk9 lakh crore, while the revenue collection target may stand at around Tk6 lakh crore.

"In the current economic context, sustainable revenue mobilisation will require greater reliance on direct taxes," he said.

"But it will not be possible unless VAT evasion and tax evasion are reduced."