If all eligible persons pay taxes in accordance with their income tax slabs, the government may increase revenue collection from personal income tax from the current 1% of the GDP to 3.1% of the GDP. According to analysts, the government should enhance the number of people who are registered to pay taxes and improve direct tax collection to combat growing inequality. The lowest tax-to-GDP ratio in the world is 9 percent in Bangladesh.
This is primarily due to the low direct tax rate, which needs to be raised. Currently, indirect taxes generate 65% of revenue, while direct taxes generate 35%. The government has taken steps to raise the percentage of direct taxes to 70% and lower the percentage of indirect taxes to 30%. If Bangladesh wishes to experience rapid growth and flourish, the RAPID chairman suggested that the revenue collection as a percentage of GDP be raised to 17% by 2030 and to 21% by 2041. There are 2.73 lakh companies that are currently registered. Only 11% of them, or roughly 30,000, pay taxes. This area is also plagued by a number of issues. Only 15,000 people pay the levy, which should be increased even if many people are wealthy.
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