As per Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26), the government plans to rationalize tax expenditures to bolster tax revenue collection and ensure optimization of forgone revenue. A tax expenditure assessment in 2018 revealed significant forgone revenue—about 2.6% of GDP in FY 2018-19, with approximately Tk 58,000 crore in direct taxes and Tk 8,000 crore from land transfer. Thereby, essential steps include defining benchmark tax rates and bases, alongside comprehensive data collection facilitated through cooperation among respected stakeholders.
Although tax exemptions target social and economic objectives, they underline the trade-off between benefits and revenue loss. Notably, sectors like agriculture and manufacturing, comprising 21.2% and 23% of GDP respectively, benefit from preferential treatment. Insights from FY 2020-21 indicate that 42.3% of total imports enjoyed customs duty exemptions, highlighting the need for strategic tax reforms to utilize revenue collection.
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