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How the people of a country are taxed is seen as a barometer of the state of its governance. For the conception of taxation in its proper enlightened form is not understood to be an exploitative process. It is seen to be an essential process : required, firstly by the need for mobilsation of resources by the government of the country for it to be able to undertake necessary administrative and developmental activities.
Civil servants have to be paid from taxes collected from the people. The maintenance of essential utility services such as roads, power supply, water supply, etc., are also to be borne from the tax revenues. Developmental activities in different sectors for the economy's expansion as well as for people's welfare are also to be met by the government from what it receives from the taxpayers. Thus, there is no way to look at taxation lightly for not being at the heart of a government's activity. Indeed, it must be at the heart of a government's activities everywhere . Governments under all circumstances would be justified in collecting more and more taxes to successfully meet the above needs.
But not everything is measured by the 'quantity' philosophy in the realm of taxation. Taxation must be tempered, as well, by many considerations relevant to their particular settings. For example, there is a very great need in the Bangladesh context -- where mass poverty is prevalent -- to distribute the burden of taxation fairly among different sections of the people. It has to be a supreme policy in our situation that the taxes and in their greater amounts shall be paid by the ones who are most able to pay taxes while those who are least able to pay taxes should be taxed lightly or not at all. This would be only meeting the end of distributive justice that economists call for in every situation.
Taxes also need to serve other motives. They can be stimulators for the economy. Tax rebates, tax incentives or tax exemptions given to certain sectors of the economy can attract investments and hence production to those sectors leading to the economy's expansion. As the base for taxable persons or institutions, thus rises, the extended base can then be progressively brought under the tax net. But a basic ethic of taxation that ought to be observed under all conditions is the one of ensuring that the poor are protected from a disproportionate tax burden compared to the rich.
A look at the present conditions of taxation in Bangladesh will show up that this basic ethic is being most flagrantly violated . For most of the indirect taxes which are added to the prices and charges of goods and services respectively, cannot be avoided by any class of consumers. All have to pay them regardless of their station in life. But all such indirect taxes are increasing all the time in Bangladesh and the poor or the very poor who form -still-- 60 to 80 per cent of the population according to some estimates, are required to bear the burden of such rising indirect taxes. For the rich this is no matter. But every Taka that a poor person is asked to surrender in the name of tax is a blow to his or her purchasing power and the purchasing power is not increasing any for the poor in Bangladesh or increasing insignificantly compared to the rich . Thus, it is extremely unfair or inequitious to ask the majority poor section of the population to bear the burden of the rising indirect taxes.
In many ways, the conditions in Bangladesh are no different from what prevailed in pre revolution France in the eighteen century. The crushing burden of taxes fell on that country's poor majority of people while the small richer classes lived off the fattest fruits of the land and were either exempted from paying direct taxes which they should have paid in proportion to their vast wealth or paid only pittances as such taxes. One of the main causes of the French Revolution that shook the world was attributed to such a grossly skewed and unjust taxation system. Bangladesh may not be considered as sitting atop, presently, over a volcano of discontent like in revolutionary France. But some keen social observers seem to find a parallel.
For example, a recent press report sought to draw attention to the fact that out of at least 10 million people in Bangladesh who are to be regarded as rich or very rich by world standards, a surprisingly tiny number of them, only some 3 thousand, declared their income to be above Taka 1 million in the current income tax assessment period. Whether even this declaration of Taka 1 million in the limited number of cases has been truthful is also deeply doubted for their income could be in billions and mainly from kickbacks and other illegal activities. There are the ones - and we see them every day - who think nothing of renting a private community centre for a million taka to host a wedding function or buy a car Taka for Taka 10 million or more. There are a considerable number of persons and they number well above 3 thousand who similarly feel no pinch as they pay tuition fees in the range of 1 million Taka annually for their children in fully foreign run English schools The same only gives one an idea of the very great wealth possessed by them which enable them to go for such luxurious upkeep for themselves and members of their families. But when it comes to declaring their incomes - even partially honestly - they seem to be very adept at concealing the same expertly.
The tax administration declared years ago the formation of the so called large taxpayers units. But like the moribund Anti-Corruption Commission, these units also remain more in existence in paper than in reality in the field. And the same is exemplary of the shocking state of mal governance in the country. The donors are the only ones found pushing the government of the day for doing this or that which include urging by them for stepped up anti-corruption activities and reaching an understanding with the political opposition to be able to hold free and fair elections. While these are good priorities that need to be promoted, the donors also should be stepping harder on the pedal so that the large taxpayers units start giving real proofs of their existence by finding out the big tax dodgers and taxing their undisclosed wealth.
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