Email this article Tax Expenditure Reporting in Developing Countries: A Case Study on Bangladesh
Abstract
Tax expenditures are government policy instruments that provide preferential tax incentives and exemptions instead of direct budget support. They are frequently applied in order to prioritise particular sectors and to attract foreign investment. Interestingly, most of these tax expenditures are applied opaquely in developing or emerging economies, mainly due to the unavailability of tax expenditure data. This study proposes a customised model in order to address this gap and recommends that Bangladesh uses the revenue forgone (RF) approach to tax expenditure estimation based on Gross Domestic Product (GDP). Developing economies like Bangladesh can replicate this method where gaining access to information is challenging. Using the recommended method of computation, we find that Bangladesh’s tax expenditure for the 2018/2019 financial year is 2.28 per cent of its GDP value. Finally, we make a few recommendations with regard to the reform of the tax expenditure policies of emerging economies like Bangladesh.
Keywords: Tax Expenditure, Revenue Forgone Method, Developing Economies, Bangladesh, Fiscal Policy.
Full Text:
PDFReferences
Altshuler, R., & Dietz, R. (2011). Reconsidering tax expenditure estimation. National Tax Journal, 64(2.2), 459–489. https://doi.org/10.17310/ntj.2011.2S.02
Ananiashvili, I., & Papava, V. (2012). Impact of the average tax rate on the aggregate demand (Keynesian models). Bulletin of the Georgian National Academy of Sciences, 6(2), 162–169. https://doi.org/10.2139/ssrn.2183744
Avram, S. (2018). Who benefits from the ‘hidden welfare state’? The distributional effects of personal income tax expenditure in six countries. Journal of European Social Policy, 28(3), 271–293. https://doi.org/10.1177/0958928717735
Baghestani, H., & McNown, R. (1994). Do revenues or expenditures respond to budgetary disequilibria? Southern Economic Journal, 61(2), 311–322. https://doi.org/10.2307/1059979
Bangladesh Association of Software and Information Services. (2021). IT and ITES industry overview. https://basis.org.bd/public/files/publication/5e127d7cb6967ba96136a3b168568073f9800e5b0f5b9.pdf
Bangladesh Bank. (2021). Annual export receipts of goods and services 2018-2019. https://www.bb.org.bd/pub/annual/expreceipt/exp1819/index1819.php
Bangladesh Bureau of Statistics. (2019). Report on agriculture and rural statistics 2018. http://bbs.portal.gov.bd/sites/default/files/files/bbs.portal.gov.bd/page/b343a8b4_956b_45ca_872f_4cf9b2f1a6e0/2020-02-02-10-36-84ecf771aa4c2e480f245fb79538ce14.pdf
Bangladesh Bureau of Statistics. (2021). Monthly release of industrial production statistics. http://bbs.portal.gov.bd/sites/default/files/files/bbs.portal.gov.bd/page/9ead9eb1_91ac_4998_a1a3_a5caf4ddc4c6/2021-06-28-08-59-cdb8716bc2e191f562e8312e62827a8d.pdf
Bangladesh Garment Manufacturers and Exporters Association. (n.d.). Export performance. https://www.bgmea.com.bd/page/Export_Performance
Bangladesh Power Development Board. (2021). Statistics of power plants. Bangladesh Power Development Board.
Bratíc, V. (2006). Tax expenditures: A theoretical review. Financial Theory & Practice, 30(2), 113–127.
Burton, M., & Stewart, M. (2011). Promoting budget transparency through tax expenditure management: A report on country experience for civil society advocates (University of Melbourne Legal Studies Research Paper No. 544). https://doi.org/10.2139/ssrn.1864324
Craig, J., Craig, J., & Allan, W. (2001). Fiscal transparency, tax expenditures, and budget processes: An international perspective. Proceedings. Annual Conference on Taxation and Minutes of the Annual Meeting of the National Tax Association, 94, 258–264.
Dio, A. (2015). Tax expenditure reporting as a tool for budget transparency: Bangladesh context. SSRN. https://doi.org/10.2139/ssrn.2832899
The Finance Act (2019). https://nbr.gov.bd/uploads/acts/Finance_Act_2019_BG_Press.pdf
Friedman, M. (1978). The limitations of tax limitation. Quadrant, 22(8), 22–24.
Geourjon, A., Bouterige, Y., Caldeira, E., Laporte, B., & de Quatrebarbes, C. (2019). Tax expenditure assessment: From principles to practice: Methodological guide. Foundation for Studies and Research on International Development. https://ferdi.fr/dl/df-PSDXZuxEEh8LihnEhHUoFkjx/tax-expenditure-assessment-from-principles-to-practice-methodological-guide.pdf
Gómez Sabaini, G., & Velasco, P. (2010). Tax expenditures for promoting investment applied to corporate income tax (Intra-American Development Bank Institutional Capacity and Finance Sector Technical Notes No. IDB-DP-137). https://publications.iadb.org/en/tax-expenditures-promoting-investment-applied-corporate-income-tax
Greve, B. (1994). The hidden welfare state, tax expenditure and social policy: A comparative overview. Scandinavian Journal of Social Welfare, 3(4), 203–211. https://doi.org/10.1111/j.1468-2397.1994.tb00227.x
Heady, C., & Mansour, M. (2019). Tax expenditure reporting and its use in fiscal management: A guide for developing economies. International Monetary Fund. https://www.imf.org/en/Publications/Fiscal-Affairs-Department-How-To-Notes/Issues/2019/03/27/Tax-Expenditure-Reporting-and-Its-Use-in-Fiscal-Management-A-Guide-for-Developing-Economies-46676
Hondroyiannis, G., & Papapetrou, E. (2001). An investigation of the public deficits and government spending relationship: Evidence for Greece. Public Choice, 107(1/2), 169–182. https://doi.org/10.1023/A:1010346400278
The Income Tax Ordinance, 1984. https://www.bangladeshtradeportal.gov.bd/kcfinder/upload/files/The%20Income%20Tax%20Ordinance%20-1984%20.pdf
Karagianni, S., Pempetzoglou, M., & Saraidaris, A. (2012). Tax burden distribution and GDP growth: Non-linear causality considerations in the USA. International Review of Economics & Finance, 21(1), 186–194. https://doi.org/10.1016/j.iref.2011.06.002
Ministry of Finance, Bangladesh. (2020). Bangladesh economic review 2019. https://mof.gov.bd/site/page/44e399b3-d378-41aa-86ff-8c4277eb0990/Bangladesh-Economic-Review
Ministry of Finance, India. (2022). Union budget. https://www.indiabudget.gov.in/doc/rec/annex7.pdf
Mortaza, M. G., & Begum, L. (2006). Tax expenditures in Bangladesh: An introductory analysis. https://www.bb.org.bd/pub/research/policynote/pn0706.pdf
National Board of Revenue, Bangladesh. (2010). SRO 268/2010.
National Board of Revenue, Bangladesh. (2012). SRO 219/2012.
National Board of Revenue, Bangladesh. (2013a). SRO 212/2013. https://nbr.gov.bd/uploads/sros/382.pdf
National Board of Revenue, Bangladesh. (2013b). SRO 213/2013. https://nbr.gov.bd/uploads/sros/383.pdf
National Board of Revenue, Bangladesh. (2015a). SRO 199/2015. https://nbr.gov.bd/uploads/sros/597.pdf
National Board of Revenue, Bangladesh. (2015b). SRO 254/2015. https://www.dpp.gov.bd/upload_file/gazettes/13886_12505.pdf
National Board of Revenue, Bangladesh. (2015c). SRO 255/2015.
National Board of Revenue, Bangladesh. (2017a). SRO 207/2017.
National Board of Revenue, Bangladesh. (2017b). SRO 211/2017.
National Board of Revenue, Bangladesh. (2017c). SRO 255/2017. https://nbr.gov.bd/uploads/sros/sro_255_incometax_2017.pdf
National Board of Revenue, Bangladesh. (2017d). SRO 256/2017. https://nbr.gov.bd/uploads/sros/sro_256_incometax_2017.pdf
National Board of Revenue, Bangladesh. (2019a). SRO 214/2019. https://nbr.gov.bd/uploads/sros/SRO-2141.pdf
National Board of Revenue, Bangladesh. (2019b). SRO 215/2019. https://nbr.gov.bd/uploads/sros/SRO-2151.pdf
National Board of Revenue, Bangladesh. (2019c). SRO 217/2019. https://nbr.gov.bd/uploads/sros/SRO-217.pdf
Organisation for Economic Co-operation and Development. (2010). Tax expenditures in OECD countries. https://doi.org/10.1787/9789264076907-en
Organisation for Economic Co-operation and Development & the National Tax Office. (2021). Tax expenditures report. https://www.oecd.org/tax/tax-policy/country-reviews-advice/tax-expenditures-report-by-the-tax-experts-commission-colombia-2021.pdf
Parliamentary Budget Office, Ireland. (2018). Tax expenditures in Ireland: Key issues for consideration (Houses of the Oireachtas Briefing Paper 13). https://data.oireachtas.ie/ie/oireachtas/parliamentaryBudgetOffice/2018/2018-09-21_tax-expenditures-in-ireland-key-issues-for-consideration_en.pdf
Philipps, L. (2012). The globalization of tax expenditure reporting: Transplanting transparency in India and the Global South (Comparative Research in Law & Political Economy Research Paper No. 43/2012). https://data.oireachtas.ie/ie/oireachtas/parliamentaryBudgetOffice/2018/2018-09-21_tax-expenditures-in-ireland-key-issues-for-consideration_en.pdf
Polackova Brixi, H. P., Valenduc, C. M. A., & Swift, L. A. (Eds). (2004). Tax expenditures―Shedding light on government spending through the tax system: Lessons from developed and transition economies. The International Bank for Reconstruction and Development & The World Bank. http://hdl.handle.net/10986/15067
Tiutiunyk, I., Kobushko, I., Ivaniy, O., & Flaumer, A. (2019). Innovations in the management of tax gaps in the economy: Foreign economic component. Marketing and Management of Innovations, 3, 112–125. http://doi.org/10.21272/mmi.2019.3-09
The Treasury, Australian Government. (2019). Tax expenditure statement. https://treasury.gov.au/sites/default/files/2019-03/ch3-3.pdf
United Nations Committee of Experts on International Cooperation in Tax Matters. (2018). Seventeenth session: 16-19 October 2018: Item 3(c)(x) of the provisional agenda: The role of taxation and domestic resource mobilization in the implementation of the sustainable development goals (E/C.18/2018/CRP.19). https://www.un.org/development/desa/financing/sites/www.un.org.development.desa.financing/files/2020-04/CRP19-The-Role-of-Taxation-and-Domestic-Resource-Mobilization-in-the-Implementation-of-the-Sustainable-Development-Goals.pdf
U.S. Department of the Treasury. (2021). Tax expenditures. https://home.treasury.gov/system/files/131/Tax-Expenditures-FY2022.pdf
Refbacks
- There are currently no refbacks.
Copyright © Journal of Tax Administration. All rights reserved. | Hosted by Docuracy Ltd | Powered by Open Journal Systems
