Assignment on Taxation
Inadequate and stagnant revenue yield relative to GDP: We can see the status of the ratio of tax revenue to GDP of Bangladesh in the following table for last 7years (Source: Bangladesh Economic Review-2010).
Revenue as % of GDP | 2003-04 | 2004-05 | 2005-06 | 2006-07 | 2007-08 | 2008-2009 | 2009-2010 | Total Revenue | 10.6 | 10.6 | 10.8 | 10.5 | 11.1 | 11.2 | 11.5 | Tax Revenue | 8.5 | 8.6 | 8.7 | 8.3 | 8.8 | 9.0 | 9.3 | Non-tax Revenue | 2.1 | 2.0 | 2.1 | 2.2 | 2.3 | 2.2 | 2.2 |
Analysis: The ratio of tax revenue to GDP is very low comparing to other developing countries.
High-ratio of indirect to direct tax revenue: Most of the tax revenue is from indirect taxes which are clear from the following table (Source: Bangladesh Economic Review-2010). Revenue (TK. In crore) | 2003-04 | 2004-05 | 2005-06 | 2006-07 | 2007-08 | 2008-09 | 2009-10 | Total revenue | 35400 | 39200 | 44868 | 49472 | 60539 | 69180 | 79484 | Tax revenue | 28300 | 31950 | 36175 | 39247 | 48012 | 55526 | 63956 | Non-tax revenue | 7100 | 7250 | 8693 | 10225 | 12527 | 13654 | 15528 | % of tax to revenue | 79.94% | 81.51% | 80.63% | 79.33% | 79.31% | 80.26% | 80.46% | Direct Tax(DT) | 6239 | 6988 | 8303 | 10275 | 12502 | 15462 | 19516 | % of DT to total tax | 22.05% | 21.87% | 22.95% | 26.18% | 26.04% | 27.85% | 30.51% | Indirect Tax(IT) | 22061 | 24962 | 27872 | 28972 | 35510 | 40064 | 44440 | % of IT to total tax | 77.95% | 78.13% | 77.05% | 73.82% | 37.96% | 72.15% | 69.49% |
Analysis: An analysis of the revenue from the existing taxes shows that the indirect taxes predominate the revenue yield of the country. More than 70% of the tax revenue are from indirect taxes.
Dominance of VAT and Import duty: From the following table we can see the dominance of VAT and Import duty (Source: Bangladesh Economic review-2010)
Item wise collection | 2004-05 | 2005-06 | 2006-07 | 2007-08 | 2008-09 | 2009-10 | VAT | 33.2% | 34.3% | 34.9% | 35.4% | 36.2% |
Revenue as % of GDP | 2003-04 | 2004-05 | 2005-06 | 2006-07 | 2007-08 | 2008-2009 | 2009-2010 | Total Revenue | 10.6 | 10.6 | 10.8 | 10.5 | 11.1 | 11.2 | 11.5 | Tax Revenue | 8.5 | 8.6 | 8.7 | 8.3 | 8.8 | 9.0 | 9.3 | Non-tax Revenue | 2.1 | 2.0 | 2.1 | 2.2 | 2.3 | 2.2 | 2.2 |
Analysis: The ratio of tax revenue to GDP is very low comparing to other developing countries.
High-ratio of indirect to direct tax revenue: Most of the tax revenue is from indirect taxes which are clear from the following table (Source: Bangladesh Economic Review-2010). Revenue (TK. In crore) | 2003-04 | 2004-05 | 2005-06 | 2006-07 | 2007-08 | 2008-09 | 2009-10 | Total revenue | 35400 | 39200 | 44868 | 49472 | 60539 | 69180 | 79484 | Tax revenue | 28300 | 31950 | 36175 | 39247 | 48012 | 55526 | 63956 | Non-tax revenue | 7100 | 7250 | 8693 | 10225 | 12527 | 13654 | 15528 | % of tax to revenue | 79.94% | 81.51% | 80.63% | 79.33% | 79.31% | 80.26% | 80.46% | Direct Tax(DT) | 6239 | 6988 | 8303 | 10275 | 12502 | 15462 | 19516 | % of DT to total tax | 22.05% | 21.87% | 22.95% | 26.18% | 26.04% | 27.85% | 30.51% | Indirect Tax(IT) | 22061 | 24962 | 27872 | 28972 | 35510 | 40064 | 44440 | % of IT to total tax | 77.95% | 78.13% | 77.05% | 73.82% | 37.96% | 72.15% | 69.49% |
Analysis: An analysis of the revenue from the existing taxes shows that the indirect taxes predominate the revenue yield of the country. More than 70% of the tax revenue are from indirect taxes.
Dominance of VAT and Import duty: From the following table we can see the dominance of VAT and Import duty (Source: Bangladesh Economic review-2010)
Item wise collection | 2004-05 | 2005-06 | 2006-07 | 2007-08 | 2008-09 | 2009-10 | VAT | 33.2% | 34.3% | 34.9% | 35.4% | 36.2% |