Homo Sapiens
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Low tax collection capability is the mother of all developmental challenge of Bangladesh. Bangladesh's tax collection rate is even lower than Pakistan by 2 percent of GDP. Pakistan is facing huge problem because of low tax collection. Bangladesh only avoided similar economic problem because so far it was a 'low earning, low spending country'. Bangladesh is a hugely infrastructure deficit country because of this legacy of low earning, low spending model. But with a lot of mega infrastructure projects now on under implementation and in pipeline, this country has to depend mostly on foreign loans to raise the money.
Because of low tax collection rate Bangladesh is facing major challenges in all sector of economy.
1.Low public investment in education, specially in higher education sector which is making us uncompetitive in the race of skilled manpower generation. Bangladesh's govt. main focus on primary and secondary education to lift out people from illiteracy, but this is not creating skilled manpower needed to propel the economy to the next stages.
2.Low investment in health sector. Specially in quality public tertiary health care infrastructure.
3.Low investment in Armed forces. With only 1.2 percent of GDP being spend on Armed forces, we can not ever hope to build any powerful Armed Forces capable of defending the country. Regional countries in South Asia and South East Asia spend 2 to 3 times per capita wise than Bangladesh in defence.
4.Low govt. spending in physical infrastructure. For this reason Bangladesh has insufficient quality of roads, railway, bridges, airports, seaport, pipeline etc. severely hampering FDI and making Bangladesh's export uncompetitive. A lot of productivity is being lost because of severe traffic jam and gridlock of vehicle transporting goods. Bangladesh spend just 3 percent of GDP in physical infrastructure while for China and Vietnam, this percentage is around 9-10 percent. This low spending on infrastructure is the direct result of low tax collection.
5. Because of low income generation by govt. it need to borrow heavily whenever it want to build any big infrastructure project. It ultimately may create pressure on economy if tax collection rate do not improve significantly in near future to repay the debt. Foreign funding for projects means, Bangladesh has less maneuvering capability when it comes to deploying native manpower, institutions and materials for the project. This ultimately hampering our chance to learn by doing.
6.Because of low tax revenue generation, Bangladesh is unable to spend on social security and benefits. This is creating more economic inequality which is becoming worse now as the pie of GDP growth now mostly concentrating on upper echelon of the society.
There are numerous other shortcomings we are now facing because of this 'Low earning, low spending model of govt. finance. If we can not elevate from this bad cycle than there is no hope of Bangladesh becoming an upper middle income country in the coming decades. Generating sufficient revenue should be the number one priority for Bangladesh govt. now.
Because of low tax collection rate Bangladesh is facing major challenges in all sector of economy.
1.Low public investment in education, specially in higher education sector which is making us uncompetitive in the race of skilled manpower generation. Bangladesh's govt. main focus on primary and secondary education to lift out people from illiteracy, but this is not creating skilled manpower needed to propel the economy to the next stages.
2.Low investment in health sector. Specially in quality public tertiary health care infrastructure.
3.Low investment in Armed forces. With only 1.2 percent of GDP being spend on Armed forces, we can not ever hope to build any powerful Armed Forces capable of defending the country. Regional countries in South Asia and South East Asia spend 2 to 3 times per capita wise than Bangladesh in defence.
4.Low govt. spending in physical infrastructure. For this reason Bangladesh has insufficient quality of roads, railway, bridges, airports, seaport, pipeline etc. severely hampering FDI and making Bangladesh's export uncompetitive. A lot of productivity is being lost because of severe traffic jam and gridlock of vehicle transporting goods. Bangladesh spend just 3 percent of GDP in physical infrastructure while for China and Vietnam, this percentage is around 9-10 percent. This low spending on infrastructure is the direct result of low tax collection.
5. Because of low income generation by govt. it need to borrow heavily whenever it want to build any big infrastructure project. It ultimately may create pressure on economy if tax collection rate do not improve significantly in near future to repay the debt. Foreign funding for projects means, Bangladesh has less maneuvering capability when it comes to deploying native manpower, institutions and materials for the project. This ultimately hampering our chance to learn by doing.
6.Because of low tax revenue generation, Bangladesh is unable to spend on social security and benefits. This is creating more economic inequality which is becoming worse now as the pie of GDP growth now mostly concentrating on upper echelon of the society.
There are numerous other shortcomings we are now facing because of this 'Low earning, low spending model of govt. finance. If we can not elevate from this bad cycle than there is no hope of Bangladesh becoming an upper middle income country in the coming decades. Generating sufficient revenue should be the number one priority for Bangladesh govt. now.
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