Tax & Taxation The term ‘tax’ has been derived from the French word taxe and etymologically, the Latin word taxare is related to the term ‘tax’, which means ‘to charge’. Tax is an obligatory payment in the part of the citizen without the expectation of any direct benefit. Taxation is the obligation of non-penal, yet compulsory transfer of resources from the private to the public sector levied on a basis of predetermined criteria and without reference to specific benefit received. It is one of the major sources of public revenue. There are basically two types of taxes, one is direct and another is indirect tax.
Direct tax is a sort of tax the impact /incidents fall back on the person on whom it is imposed. Indirect taxes are those burden of which can be passed on others through price vehicles. The Four “R”s Taxation has four main purposes or effects: Revenue, Redistribution, Repricing, and Representation. 1. The main purpose is revenue: taxes raise money to spend on armies, roads, schools and hospitals, and on more indirect government functions like market regulation or legal systems. 2. A second is redistribution. Normally, this means transferring wealth from the richer sections of society to poorer sections. 3.
A third purpose of taxation is repricing. Taxes are levied to address externalities; for example, tobacco is taxed to discourage smoking, and a carbon tax discourages use of carbon-based fuels. 4. A fourth, consequential effect of taxation in its historical setting has been representation. [ ][ ] Tax Base A tax base is comprised of or refers to the assessed value of a set of assets, or the income stream generated by assets or investments. In another way, a pool of taxable assets or investments represents a tax base. All the houses in a town or city, and any other taxable real estate, collectively form that municipality’s property tax base.
All the residents, businesses, and taxable assets in a state comprise the state’s tax base, as do all residents, businesses, and taxable assets of a nation. The tax base expands when the population of a municipality, state, or nation grows, or when new businesses start up or existing businesses expand. When businesses shrink or close down, or people move away from a city, state, or nation, the tax base diminishes. In an effort to increase collected revenues, governing entities therefore often try to expand their tax base by offering a range of incentives to attract business and residents. Bangladesh: A Developing Country
Bangladesh, as an emerging developing country, is committed to augmenting revenue and achieving fiscal discipline with a view to increasing self-reliance. In recent years, the Government of Bangladesh has initiated some administrative and policy reforms in the tax system. An improved tax administration in association with some pragmatic policy initiatives has resulted in a modest improvement in the tax-GDP ratio of late. The supreme tax authority of Bangladesh is National Board of Revenue (NBR). National Board of Revenue (NBR) National Board of Revenue (NBR) an organ of the Ministry of Finance.
It lies at the apex of the whole revenue organization of the government and is responsible for the administration of almost all the direct and indirect taxes. In addition to collection of taxes, NBR plays a key role in formulation and implementation of the fiscal policy of the government. NBR was constituted in 1972 under the National Board of Revenue Order 1972, which repealed and replaced the Central Board of Revenue Act 1924. [ ] Functions of NBR NBR performs the same functions and is vested with the same powers and duties as those of the former Central Board of Revenue.
The main functions of NBR are: ? Collecting direct and indirect taxes; ?Formulating and dealing with policy matters including continuous re-appraisal of tax policies and tax laws; ? Controlling and supervising direct and indirect tax administration; ? Helping in formulating tax policy and processing legislation, preparing tax revenue budget, negotiating agreements relating to tax, donations, debts and general cooperation with foreign governments and international agencies, and also vetting tax clauses of agreements with foreign governments, agencies or institutions; Performing all the functions and exercising the powers vested in the government by various tax laws, such as disposing of revision application under the customs, excise and VAT laws, and dealing with exemptions from various taxes; and ? Helping in preventing smuggling, implementing import and export policies, and formulating policies for domestic industrialization or encouraging foreign direct investment. In its secretariat functions, NBR participates in inter-ministerial deliberations on all economic policies having a taxation bearing.
Till 1995, it was the highest appellate authority on matters of assessments of customs duty. A customs, excise and vat appellate tribunal was established in 1995 under the Finance Act 1995 to deal with appeal cases relating to customs, excises and VAT. Role of NBR in Expanding Tax Base The National Board of Revenue (NBR), as the central authority of tax policy and administration in Bangladesh, plays a critical part in the development of the country and expanding its tax base. In case of expanding tax base, NBR has taken many radical steps and some of these steps are given below: Forming sound and taxpayer friendly policy in line with the international best practice while also being consistent with the local conditions in Bangladesh as well as the higher economic and fiscal policy goals and imperatives of the Government. ?Creating an administrative and legal framework that ensures the collection of sovereign taxes in a fair / accurate manner while also supporting the competitiveness of Bangladeshi businesses in a transnational global economy. ?Increasing cooperation and coordination with other government and non-government agencies. ?Increasing awareness among the people through using media. Enriching and enhancing taxpayer experience through reducing harassment and providing better taxpayer service available at multiple remote/ customer facing touch points. ?Reducing compliance cost for the taxpayer by reducing unnecessary paper works and contacts between tax administration and taxpayers thereby establishing a regime that makes the relationship between the tax departments and the honest and diligent taxpayer incident free. ?Setting up an efficient, integrated national tax accounting network that will correctly account for, reconcile and record tax payment information at a transactional evel for all taxes and make visible this information in real time basis to taxpayers and to all stakeholders including Government, NBR, tax officers, Bangladesh Bank and taxpayers. ?Modernization plan (2011-16): In March 2011, the NBR took the decision to chart out a comprehensive modernization plan, encompassing all components of NBR reform efforts under one Plan that could be implemented with a view to achieving the intended goals over the next five years. Therefore, according to the following discussion we can easily understand that the role of NBR in increasing the tax base of the country is very critical.
We hope it will be more in future. Reference: Accounting Tools: Tax Base Definition, retrieved on 18-07-2011, from: http://www. accountingtools. com/dictionary-tax-base Banglapedia: National Board of Revenue, retrieved on 18-07-2011, from: http://www. banglapedia. org/httpdocs/HT/N_0085 NewsDawn: New Bangladesh Tax Policy, retrieved on 18-07-2011, from: http://www. newsdawn. blogspot. com/2011/07/new-bangladesh-tax-policy. htm Tax Base Definition: What is Tax Base? , retrieved on 18-07-2011, from: http://www. investorglossary. com/tax-base