...An Evaluation of the Tax System in Bangladesh Ahsan H. Mansur, PRI Mohammad Yunus, BIDS Presentation Outline Salient Features of Bangladesh’s Current Tax System, Trends in Growth and Revenue Structure VAT System of Bangladesh: Performance, Recent/Past Reforms, Revenue Potential, structural and administrative deficiencies, and alleviating measures Discussions on personal and corporate income tax systems have been covered in this study, but not discussed in detail in in this presentation due to time constraint. Finally the presentation assess the scope for further reforms that the authorities may consider in order to gain more buoyancy in revenue generation POLICY RESEARCH INSTITUTE OF BANGLADESH 01 Introduction: Salient Features of Bangladesh’s Current Tax System Notwithstanding the various fiscal reforms of the recent past, Bangladesh Tax system continues to suffer from a number of major weaknesses: • • • • • • • • Low Level of Revenue Mobilisation Regressive Nature of Taxation (especially VAT) High Tax Incidence Low Tax Base High Degree of Tax Evasion Limited Administrative Capacity Resource Constraints (Human and Logistics) Cumbersome Legal Procedures 02 POLICY RESEARCH INSTITUTE OF BANGLADESH Growth Trends and Revenue Structure of Bangladesh Over the past years total revenue and tax receipts as % of GDP have increased – from 6.5% and 5.5% respectively in FY1982 to 10.9% and 9.0% respectively in FY2010. Tax receipts roughly generate...
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...MANAGEMENT British Tax System Duties and responsibilities of the tax practitioners in the UK tax environment Introduction The British government requires that its entire citizen pay taxes as stated by law. Taxes account for much of Government revenues. The payments of taxes involve or may involve two levels of government, the local and the central government. The central government revenues (Her Majesty’s Royal Revenue and Customs), comes primarily from income tax, National Insurance contributions, Value added tax, corporation tax and fuel duty. On the other hand, local governments get their revenues through grants from central government, business rates in England, Wales, Scotland and Northern Ireland, Council Tax, fees and charges from parking. It is worth to note that taxes contribute to about 40% of the GDP and such the government has made it very clear that taxes have to be paid so as to enable it have requisite resources to fund her operations (HMRC, 2014). Economic analysts and critics say that the UK tax environment is one of the world’s most unfriendly to the citizenry. It is imperative to note that as much as there are tax exemptions in the UK; citizens still have to pay taxes virtually in all areas. But what are some of the main taxes that define the tax environment in UK (Michaely et.al, 2012). This paper takes a look at the tax that are paid and who is supposed to pay what and at what rate. In the fiscal year, 2014-2015, the UK government projects to raise...
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...Australian Tax System Australia is a nation that is envied by many underdeveloped countries for our abundance of public services, transport and healthcare as well as the carefree lifestyle that many Australians have grown accustomed to. However, the Australian taxation system has been persistently scrutinized by its taxpayers for its many pitfalls in providing an equitable means of raising government revenue. In my opinion, the major shortcomings of the Australian taxation system include its lack of neutrality, with reference to high-income earners and small business owners, its constant lobbying towards the baby boomer generation, its current ageing population crisis and the permitted negative gearing of investment properties. Many sweeping reforms have been suggested in an attempt to rectify these issues, however it seems that no such recommendations have been implemented. Neutrality of Australia’s Tax System I believe that there are too many vested interests and rent seekers in today’s society for the Australian tax system to be neutral. However, in my opinion, the Australian tax system favors high-income earners and small businesses, in reference to negative gearing, discretionary family trusts and unfair deductible expenses. Negative gearing refers to when an investor purchases a rental property, but the net rental income is not enough to cover the interest on the money borrowed. Negative gearing favors the high-income earners due to the fact that the higher the tax rate...
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...5. The German tax authorities The „Bundeszentralamt für Steuern“ (The Federal Central Tax Office) is responsible for the tax system in Germany. In order to catch tax evaders the German authorities have ample access privileges. In the case of suspicion of tax evasion they have access to most public databases. Moreover in Germany the bank secrecy in fact doesn’t exist since the banks have to corporate with the tax authorities, if there is any suspicion of tax evasion. Punishment for tax evasion is very strict and hard in Germany. For serious tax evasion the consequence can be high fines and a prison term up to 10 years. The period of limitation for tax fraud amounts also to 10 years. Compared to international regulation Germany is strict regarding tax evasion. Australia and Germany have a double tax agreement which was stated in 1974. Purpose of the agreement is the avoidance of double taxation and tax evasion of individuals and businesses and a general ease in favor for the cross border economic exchange. The agreement says in which country individuals and companies have to pay taxes. Crucial for the tax claim is the habitual residence of the individual or the permanent business establishment of the company. Article 15 of the agreement for example states that a Non-executive director who´s getting paid for his work in Australia, while he is living in Germany, also must pay taxes in Germany. Conclusion: Even if there are many opportunities to avoidance or evasion of taxes...
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...Common Sense Approach to Reforming the Federal Tax System On February 3, 2013 marked the 100th birthday of the 16th Amendment. The 16th Amendment paved the way for the creation of the federal income tax that continues to this day to have far reaching repercussions on the American tax payer. Before the ratification of the 16th Amendment, the birth of the federal income tax dates back to the Civil War. In order to finance the Civil War, President Abraham Lincoln signed into law Revenue Act of 1861 on August 5, 1861. The Revenue Act consisted of a flat tax rate of 3% on income above $800 and 5% on individuals living outside of the United States. On July 1, 1861 United States Congress repealed the Revenue Act of 1861 and replaced it with the Revenue Act of 1862. The Revenue Act of 1862 introduced a progressive tax and established the Bureau of Internal Revenue. In 1872 Congress repealed the Revenue Act of 1862. One again elected officials tried to revive the federal income tax in 1894. However, in 1895 the federal income tax was declared unconstitutional by the U.S. Supreme Court because the tax was not apportioned according to the population of each state. In an address to Congress on June 16, 1909 President Howard Taft proposed that Congress consider a new amendment to the Constitution. “I recommend, then, first, the adoption of a joint resolution by two-thirds of both Houses, proposing to the States an amendment to the Constitution granting to the Federal Government...
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...exemption to $25,000. School districts would be held harmless from all or part of the revenue loss with additional legislative funding. The amendment also would constitutionally prohibit a sales tax being imposed on the sale of your home or business property. Supporters suggested cutting property taxes by increasing the homestead exemption would stimulate economic growth and provide tax relief, as well as increase the state share of public school funding. Moreover, homestead exemptions particularly benefit low-income individuals, by exempting a higher percentage of the value of a less expensive house. Opponents argued that many taxpayers will see only marginal reductions in their property taxes – as little as $126 annually, according to some estimates. Proposition 2 (XXXX – yyy%-zzz%) In 2011, voters approved a constitutional amendment to allow a surviving spouse of a disabled veteran an exemption from property taxation on the disabled veteran’s residence homestead, as long as the...
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...Malaysian Tax System [pic] |Tax System | | | | . |Tax Legislation | | . |Individual Taxation | | . |Corporate Taxation | | . |Self Assessment System | | . |Real Property Gains Tax | | . |Witholding Tax | | . |Indirect Taxes | | . |Investment Incentives | | | | |2006 Important...
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...An Evaluation of the Tax System in Bangladesh Ahsan H. Mansur, PRI Mohammad Yunus, BIDS Presentation Outline Salient Features of Bangladesh’s Current Tax System, Trends in Growth and Revenue Structure VAT System of Bangladesh: Performance, Recent/Past Reforms, Revenue Potential, structural and administrative deficiencies, and alleviating measures Discussions on personal and corporate income tax systems have been covered in this study, but not discussed in detail in in this presentation due to time constraint. Finally the presentation assess the scope for further reforms that the authorities may consider in order to gain more buoyancy in revenue generation POLICY RESEARCH INSTITUTE OF BANGLADESH 01 Introduction: Salient Features of Bangladesh’s Current Tax System Notwithstanding the various fiscal reforms of the recent past, Bangladesh Tax system continues to suffer from a number of major weaknesses: • • • • • • • • Low Level of Revenue Mobilisation Regressive Nature of Taxation (especially VAT) High Tax Incidence Low Tax Base High Degree of Tax Evasion Limited Administrative Capacity Resource Constraints (Human and Logistics) Cumbersome Legal Procedures 02 POLICY RESEARCH INSTITUTE OF BANGLADESH Growth Trends and Revenue Structure of Bangladesh Over the past years total revenue and tax receipts as % of GDP have increased – from 6.5% and 5.5% respectively in FY1982 to 10.9% and 9.0% respectively in FY2010. Tax receipts roughly generate...
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...ALTERNATE TAX SYSTEM Taxation is something that we have lived with for hundreds of years and has become part of life. As a country we have continued to evolve through industry, medicine, technology, etc., has our tax system? Yes, there have been modifications to the system to try and keep up with the changing times, but has this system reached a point that warrants a change? This paper will take a look at the efforts to change our nation’s tax system, the alternate systems being proposed, and how it benefits our people and our country. While researching for this paper, I was amazed at all the information available as well as grass roots campaigns to reform our tax system. While everybody says their plan is “fair” is always up for debate, but goes to show the progression our country can make to change something we don’t feel is quite right. The complexity of the tax codes today allows companies like H & R Block to do annual revenues of $3.8 billion. I think changes can be made where more of that money can go to ourselves rather than to figuring how much money we owe. The Flat Tax is one method that has been at the forefront of this debate. This plan would have one tax rate for all wealthy and middle class taxpayers with the poor paying little to no tax. The rate has generally been 17 percent which for some is much lower than they currently pay. It would eliminate the standard and itemized deductions as well as all exemptions making the tax based off of what you earn...
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...How does the tax system in Great Britain differ from the US tax system? It is no surprise that the majority of American’s think that the U.S. tax system stinks. Our corporate tax, local tax, and state tax systems’ unconventional structure leaves a lot to be desired. With that said, the United Kingdom’s tax system has some of the same fundamentals, but it seems like they are moving in the right direction. In reference to corporate taxes, the United States is one of 34 countries that belong to an international economic organization called the Organisation for Economic Co-Operation and Development (OECD). Among the 34 member countries, the U.S. has the highest permitted corporate tax rate of anywhere from 39%-54%, taking into account federal and state taxes. According to The Tax Foundation, the U.S. METR (marginal effective tax rate) on corporate investment is 35.3%, which has resulted in reduced corporate tax revenues and a shrinking U.S. corporate sector (take for instance Chaquita Company). On the other hand, the U.K.’s METR is much less at 21% (and supposedly 20% in 2015), but there are very few tax loopholes in comparison to the U.S. In regards to both individual and corporate income, the U.K. uses a territorial tax system in which corporate and individual income is only taxed when earned domestically. The U.S. uses a hybrid system in which corporations and individuals are required to pay taxes on all income upon repatriation, regardless of where it was earned...
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...are basic principles of a sound tax system? Give a detailed account of aforementioned basic principles. Ans. The fundamental purpose of taxation is to raise the revenue necessary to fund public services. While there are many ways to achieve this goal, a widely agreed-upon set of principles should be used to evaluate tax systems. There are five commonly cited principles of sound tax policy: equity, adequacy, simplicity, exportability, and neutrality. Equity: Two Kinds of Tax Fairness When people discuss tax “fairness,” they’re talking about equity. Tax equity can be looked at in two important ways: vertical equity and horizontal equity. Vertical equity addresses how a tax affects different families from the bottom of the income spectrum to the top—from poor to rich. Three terms are used in measuring vertical equity: ■ Regressive tax systems require that low- and middle-income families pay a higher share of their income in taxes than upper-income families. Sales taxes, excise taxes and property taxes tend to be regressive. ■ Proportional or flat tax systems take the same share of income from all families. ■ Progressive tax systems require upper-income families to pay a larger share of their incomes in taxes than those with lower incomes. Personal income taxes are usually progressive. Horizontal equity is a measure of whether taxpayers with similar circumstances in terms of income, family structures, and age pay similar amounts of tax. For example, if one family pays...
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...Currently, we know that U.S. government employs the worldwide tax system to tax corporations and citizens on their worldwide income. While most developed countries use the territorial tax system to tax only the income within the countries’ borders. In order to avoid high overseas income tax, some U.S. corporations move their headquarters abroad, which obviously would cause decline of tax revenue in America. In my opinion, one way to stop this “flight of capital and tax base” is to pivot toward the territorial tax system. In the first place, the worldwide tax system should be abandoned because it drives American business outside home country. Under worldwide tax system, U.S. corporations have to pay tax to U.S. government wherever they are in the world. Although there are some provisions to alleviate the double taxation, such as the foreign tax deduction and the foreign tax credit, it still reduce the earnings from investing in foreign country. Corporations have to consider their potential earnings before they decide to invest in a new market. Therefore, corporate inversion is not surprise to see. On August 6th, 2015, a fertilizer manufacturer, and Coca-Cola Enterprises, a drinks bottler, both said they would move their domiciles to Britain after concluding mergers with non-American firms. [1] On August 26th, 2014, Fast food chain Burger King announced its plan to change the headquarter to Canada and, potentially, save on corporate income taxes about $275 million. [2] Furthermore...
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...Singapore Tax Rates and Income Tax System Introduction Singapore’s is one of the world’s biggest economies. Since the global financial crisis and more recently, the Eurozone sovereign debt crisis and the downgrading of the US credit ratings, many global and local investors has sought Singapore as a new safe haven for investing their wealth in and setting up businesses and regional headquarters. In 2010, Singapore’s economy has rebounded close to 15% year on year. Singapore, due to its scarcity of natural resources, depends heavily on foreign investments for growth and economic expansion. Therefore, the government’s policy is to advocate Singapore as a global hub for international trade and commerce. Over the past years, Singapore has always been ranked of one the frontrunners in the world in terms ease of doing business (1), world leader in foreign trade and investment (1), best investment potential for 16 consecutive years (2), most open economy for international trade and investment (1). Source: http://www.weforum.org/reports/global-enabling-trade-report-2010?fo=1 http://app.www.sg/who/196/Business-and-working-conditions.aspx http://www.doingbusiness.org/data/exploreeconomies/singapore/ Another significant reason Singapore continues to attract both local and overseas investment is due to its tax regime – well-known for its attractive corporate and personal tax rates, tax relief measures, absences of capital gains tax, one tier tax system and extensive double...
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...Proceedings of the AABEA Biennial Convention, October 12th, 2002, Washington DC, USA Review of the Tax System in Bangladesh A Prerequisite for Industrial Growth T. A. M. Nurul Basher* E-mail: nurul-basher@betelco.com Abstract - This paper has been written to highlight the sustainable industrial growth problems being faced by the entrepreneurs in Bangladesh. There are multifarious problems for Industrial growth in Bangladesh but the major bottleneck is the adverse tax system. There exists no consideration for industrial raw materials import in so far as application of duties and taxes compared to those of finished consumer goods. The net result is increase in production cost which in turn makes the product noncompetitive. So as not to create an extra burden on industrial productions, the government needs to remove duties and taxes from imported raw materials as in many Middle Eastern countries and Thailand. The government implicitly accepts the adverse effects of the improper taxes on our industrial growth and has tried partially to alleviate some of these impediments by creating Export Processing Zones and Bonded Ware Houses; this paper explores the benefits doing away with these high import duties altogether. It also looks at the paybacks to the economy from industrial growth. Finally, the expansion of the income tax umbrella is considered and in particular its effects on growing a greater sense of national civic duty and its impact on the voting patterns of the electorate...
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...What are the Challenges in Designing an Effective Personal Income Tax System? Introduction Taxation, as a primary media of the implementation of fiscal policies of various national governments, generally has three primary functions, which come as follow: * Raise funds as a main source of fiscal income of national governments * Stabilize the market and macro economy against market failure * Distribute and redistribute the income among individuals to reduce social wealth inequality The priority of those functions varies from country to country and changes in different phases of social and economic development. For most developing countries, the widening gap between the rich and the poor is not only a major economic issue arousing public concern but also a major social issue. The developed west, yet is in need of effective taxation system to tackle with problems such as everlasting heavy deficit and dim market outlook. Table 1 World Gini Indexes for Major Global Economies in 1990, 2000 and 2010 Year | U.S. | Canada | U.K. | Switzerland | Germany | France | Russia | China | Brazil | India | Japan | 1990 | 42.8 | 35.2 | 36.5 | 34.1 | 34.2 | 29.2 | 25.9 | 32.7 | 60.4 | 31.2 | 26.4 | 2000 | 44.2 | 33.3 | 37.5 | 33.4 | 30.3 | 31.1 | 42 | 40.7 | 58.5 | 32 | 27.6 | 2010 | 47 | 33.6 | 35.9 | 32.4 | 30.5 | 33.2 | 35.9 | 48.1 | 49.5 | 35.6 | 32.1 | Among the taxes of all kinds, personal income tax is one of the most effective monetized tools targeting at individual...
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