PRI chief Ahsan Mansur demands NBR reforms to avoid 'conflict of interest’

Economist Ahsan H Mansur has criticised the government move to implement the new VAT law and sought reforms of the National Board of Revenue (NBR).

Executive Director of Policy Research Institute, or PRI, Mansur said Bangladesh would never be able to get out of the revenue trap “unless we reform NBR itself”.

“NBR is an administrative body. It has no expertise on formulation of taxes,” he said, “as a result, administrative convenience is dictating the formulation of tax policy."

He said they develop law “which is administratively easy to implement”.

He was speaking at a luncheon meeting of the American Chamber of Commerce in Bangladesh (AmCham). Its President Md Nurul Islam moderated the event also attended by former finance adviser to the caretaker government AB Mirza Azizul Islam.

Later, speaking to bdnews24.com, Mansur explained his position on reformation of the NBR.

“We always see tax policy is being used as an instrument for the tax administration’s convenience. And the tax policy is being compromised because our tax policy is being formulated by the NBR,” he said.

But he said the “revenue authority is only responsible for administering the law, not preparing the law, not drafting the law”.

"Here we see a conflict of interest."

“Administration sees it from the revenue maximisation point of view,” he said, citing the example of tax on stock dividend in the proposed budget.

“It's gross negligence and lack of knowledge about how economy works.”

“The VAT system they introduced in the budget reflects those who made this compromise (by introducing the system) did not have any idea of the VAT system. They have carried away in the negotiation,” he said.

“Maybe administrative convenience ….but it's highly undesirable. So separate tax policy formulation body and tax administration are the standard operating procedure (SOP) globally and Bangladesh should do it."

Finance Minister AHM Mustafa Kamal has unveiled a Tk 5.23 trillion spending plan for fiscal 2019-20, which is an 18 percent increase from the revised budget of the outgoing fiscal year.

Among the many changes, he proposed raising the customs duty on smartphones to 25 percent from the existing 10 percent which was also criticised by the economists.

“It is not a luxury anymore to have a smartphone,” Mansur said at the event.

The former adviser termed it the “un-smart” thing in the “smart” budget as called by the finance minister.