THE tax return system of the country has remained one of the stumbling blocks to the growth of the government's earning from income tax paid by individuals and companies. It is still complicated and not friendly to the taxpayers. The unfriendliness is not only limited to the papers, which are complicated, especially for the taxpayers who have little knowledge of the tax laws. In fact, the tax people themselves are a part of the problem. The result is that people in general, who are otherwise responsible citizens, remain outside the purview of the tax system of the administration. The consequence has been reflected in the very poor tax-gross domestic product (GDP) ratio, being at the lowest in the South Asia.

The fact that the tax administration is itself a contributor to the low-tax-GDP ratio is admitted by the authorities concerned themselves. So, the government has taken some measures to make the system easier and more accessible to the taxpayers. But still there is hardly any improvement when one counts the number of people who paid tax in the last fiscal. The figure does look really absurd at only 700, 000 in a country of 150 million! Even if one points to the fact that the income level of the majority of the population is low and as such are excluded from the tax net, still then the number is not at all at any acceptable level, particularly considering the fact that the tax-exempted limit is only Taka 0.165 million (1.65 lakh) of annual income.

The complaint is often made by tax people and various quarters concerned that it is the people's general apathy towards paying taxes that is to blame for the poor tax-GDP ratio or the low number of taxpayers compared to the size of the population.

But people's dislike for paying taxes is not unique in the case of Bangladesh. People are nowhere angels, when it comes to make an enforced payment on their earnings. And it is naïve to expect that any people would become good taxpayers out of their own volition. The truth is it takes time before they get used to the system. The fear of penalty under law, the understanding of the socio-economic dividends a taxpayer may draw and the pure habit of paying taxes-all these work together to make people good taxpayers. But before the people become good taxpayers, it is the responsibility of the government to create the proper environment before they become so. The tax-payers, both actual and potential, do need to understand properly the risks of tax evasion or avoidance as well as the benefits of making due payments of income tax. The culture for tax compliance will then be promoted.

In Bangladesh the environment is yet to be created. Recently, the government has taken all necessary steps to introduce a modern system of submitting tax-returns online for the very Large Taxpayers Unit (LTU) including top companies and individuals of the country. The system of paying online tax returns for the large-taxpayers will come into effect from the July 1, 2009-10. According to the authorities, the aim of the new system is to serve only 37 per cent of the country's taxpaying population.

It is well and good. Though the system will serve only a section of the taxpayers, it will also be a test of its efficacy. If the system works well for the targeted section of the taxpayers, then the government may think of expanding it further for the rest of the taxpayers in the future. Since the system of paying income tax online will help reduce discretionary powers or unwarranted human intervention in the whole system to a marked degree, it is expected to keep in check the evil palm-greasing culture. From that sense, the new system is certainly a welcome one. So, if successful, the government's objective should be to extend the benefits of the system to the rest of the taxpayers, too.