Tax policies should be left to people’s representatives

Editorial, NewAge, November 16, 2007. Dhaka, Bangladesh

Tariffs and taxes are inherent parts of the economic policy that governs the state. They partially reflect the vision that the politicians have in mind and the direction in which they desire to steer the economy. As such tax policy should by all means remain strictly under the authority of the elected people’s representative, meaning the finance minister. This authority to decide upon tax policies must not rest on a bureaucrat, be it within the revenue board or at the finance ministry. The International Monetary Fund’s suggestion the tax policy unit, in order to ensure impartial implementation of tax regulations, should be placed ‘at an arm’s length’ from the government and thus be located at the finance ministry is erroneous and self-contradictory.

Firstly, establishing this unit at the finance ministry would further integrate the unit with the political establishment, if anything, since it would then be directly under political supervision. Secondly, the tax policy unit would be charged with issuing statutory regulatory orders, which we have pointed out before are undemocratic and illegal, and setting tax policies but it would still be up to the revenue board to ensure implementation of those policies. Thirdly, application of tax laws, as long as they are universally applied, must be decided by the political quarters depending on the economic situation and business environment of the country and as such there must be political involvement in formulation and application of the tax regime. The IMF also recommends that the unit should be headed by a joint secretary at the ministry. As the revenue board officials pointed out at a meeting on Wednesday, this additional secretary or the staff working at the unit are likely to be frequently transferred and may not command the kind of expertise or skills required for the job. Frequent transfers would also hamper the consistency and smooth functioning of such a unit.

We agree with the experts that the suggested move would surely weaken the revenue board when it should rather be strengthened with the infusion of more staff and personnel to review tax policies and gradually strive towards a progressive tax structure that not only ensure income for the exchequer but also acts as a redistributive measure through which the radically unequal distribution of wealth and economic disparity. We believe that the suggestions of the revenue board personnel are justified when they ask for a separate policy unit within the board and more personnel to work there. However, the matter of policy setting should not be left with the bureaucrats or any personnel of the revenue board and must be the domain of the elected public representative in charge.

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