Using direct taxation to boost revenue and tackle inequality: A

The responsibilities of formulating and changing a tax policy lie on the members of the Parliament of Bangladesh and bureaucrats in the Ministry of Finance and Planning, while the NBR shoulders the responsibility of implementing it. [...] Despite the very poor performance of personal income tax to generate revenues for the government, there is the absence of full-hearted effort from the government to increase the tax net by reaching the hard-to-tax individuals who are out of the tax net. [...] While tax evasion is closely linked to the high degree of the informality of the labour market of Bangladesh7, the political settlement among the major actors and institutions of Bangladesh's tax system has played a major role in the dominance of tax evasion. [...] The need for reform The importance of political economy factors in explaining the current inefficiency of the tax system of Bangladesh becomes obvious when comparing the characteristics of the current tax system of Bangladesh with the key recommendations of the tax system that has been outlined in theory. [...] It identifies the role of different stakeholders in the current performance of the tax system, outlining the factors that facilitate or constrain the reform of the tax policy as well as tax administration in Bangladesh.