The government should reduce its growing reliance on value-added tax as it negatively affects the poor, said Sushasoner Jonny Procharavizan (Supro) yesterday, a network of grassroots non-governmental organizations.
The rich and the poor buy goods at the same price, providing the same amount of VAT, said KGM Faruque, a member of Supro's national council, while presenting a paper to a discussion on the reform of the progressive tax system.
Supro, also known as the Campaign for Good Governance, organized the event at the National Press Club.
"Everybody has to pay VAT.A beggar has to pay VAT if he buys something.It's a pure injustice coming from tax policy," he said.
The poor have to spend the majority of their income on essential goods and the heavy dependence of the government on indirect taxes negatively affects them.
Supro held meetings with people in 24 districts of 8 divisions between September and November 2017.
Attendees at the meetings called for broadening the tax net, reducing tax evasion and illegally transferring funds out of the country.
They also suggested reducing reliance on VAT, which is the biggest source of revenue for the government. VAT accounted for 36% of the total tax of 185,003 Tk crore collected during the 2016-17 fiscal year.
Only one percent of the population pays income tax, and a crore could be placed under the tax net.
"Instead of taking measures to increase the perception of direct taxation, the government is increasing the scope of indirect VAT."
Income tax receipts could be increased by checking for corruption in the collection process.
More shop owners should be subject to the tax system, because about 60 lakh on the 80 lakh present in the country have the ability to pay, adds Faruque.
The progressive tax system that focuses more on direct taxation aims to reduce disparities, said Muhammad Abdul Mazid, former president of the National Revenue Council.
About 92% of taxpayers belong to the middle class and the rest are rich.
"The reform of the tax system is necessary," he said, adding that the implementation of the VAT law had been postponed until 2019 because of the resistance of companies.
Once framed, the law should be implemented, Mazid said, while suggesting awareness and a social movement to encourage all to pay the tax properly.
Matiur Rahman, commissioner of the BNR's large taxpayer unit, said his unit was collecting 56% of the total VAT collected in one year.
About 90% of the VAT collected comes from 250 to 300 companies and these companies could initially be subject to the new VAT law.
Tax evasion takes place because of loopholes in the tax system, he added.
"When an official wants to do something good, the person faces opposition, letters are sent by unidentified people and lobbyists are named against them," he said, while calling for the protection of courageous and creative officers.
MA Mannan, Minister of State for Finance, has focused on preventing waste of money.