A doubt has been cast over the viability of the large taxpayers' units (LTU) that was created nearly one-and-a-half-years ago to help boost the government's tax-revenue collection. Two separate LTUs - one for value added tax (VAT) and another for income tax - were set up in October 2004 in line with the government's tax administration reform programme, prescribed by the International Monetary Fund (IMF), sources said. "It is necessary to review how viable the LTUs are in the context of the country's present economic perspective," a National Board of Revenue (NBR) official told the FE. Experts and official sources said few counties across the world have made tangible success in their tax collections through creating such separate tax collection wings. Despite realising the fact, the government had to set up such units because establishment of LTUs was one of the vital components of the government's revenue sector reforms. The multilateral donors had tagged the success of the revenue sector reform with the disbursement of its Poverty Reduction Growth Facility (PRGF) fund for Bangladesh, according to officials. In June 2003, the IMF's executive board approved the three-year PRGF assistance worth nearly US$507.7 million for Bangladesh. Meanwhile, the LTUs are yet to make any visible results in boosting the government's overall revenue collections mainly due to inadequate manpower, poor logistic supports and absence of a well-defined operational structure for the VAT wing. "The LTU authorities found itself in a spot of bother to smoothly run its activities primarily because of acute manpower shortage and lack of adequate logistic support," an official source said. The official also identified absence of an organogram for the LTU's VAT wing as another major roadblock, saying that the NBR had submitted the draft organogram to the government for approval several months back. Terming the chronic shortage of manpower one of the major problems for its failure in attaining the revenue collection target, officials said the unit is running with some 30 officials and employees as against the minimum required manpower of 175. Because of the shortcomings, the unit continued to miss its VAT collection targets set by the NBR. Official sources showed that the overall collection under the VAT wing fell short of target by nearly Tk 5.0 billion in the 2004-05 fiscal year. The LTU requires contributing around 65 per cent to the government's total VAT collections. As many as 151 large companies are paying VAT through the LTU. Besides, the income-tax wing of the LTU is to generate around 30 per cent of the government's total tax revenue in the form of income tax.
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