Why is tax-GDP ratio so low in Bangladesh and how to raise it?

[Homo Sapiens]

IMF and WB just take whatever BBS gives to them and report it. Its not like they conduct independent investigation into the claim. Every country has its own independent evaluator who would look at the numbers and make an assessment call on the same. However with Bangladesh, every organization that is involved in GDP estimation and assessment is govt led. Their reliability is doubtful. Its not like IMF or WB haven't raised their concerns about your data. There is not much they can do other than that.

In any case, BBS can't continue like this, as any further reduction in tax-to-GDP ratio would be an embarrassment to the country. Even sub saharan Africa is doing better than Bangladesh at this point.

Even if IMF, World Bank do not do the field survey but they have other means to get the overall picture of the economy, otherwise they would not have been able to do economic forecast. There are World Bank, IMF office in Dhaka. They are always monitoring the economic indicators.

GDP is not any random number, it is the aggregate of thousands of small data. BBS can not manipulate all of these and show a drastically different picture, it will create chaos. Because all the govt. decisions taken are based on data presented by BBS. Bangladesh is not a secretive police state like North Korea. Any foreign expert can come to Bangladesh, do serious research and can publish all the ''flaws and manipulations'' to see for all. So far, there is no serious doubt raised by IMF and World Bank about the reliability of BBS data. They are generally strict about publishing economic data, note that IMF do not publish Pakistan's nominal GDP for current year as they are under multiple Bailout package from IMF. GDP growth figure may differ a few percent between their estimate and the BBS(this difference was not significant before COVID-19, usually 0.5 to 1.0 percent) but other macro-economic indicators are more in line among them.

So far most of the criticism of BBS comes from conservative economists of Bangladesh, one came from a former BBS official. But their criticism is more about expressing general doubt or claim that BBS is manipulating data. They could not come out of any concrete evidence that this is where data is being manipulated and this much. They could not come out of any alternative estimate of GDP. They may have some vested interest, political or others to discredit the govt. and BBS.

To create a fake economy twice the size of the real, BBS has to come out fake GDP growth of 7 percent for over a decade, in that time period Bangladesh's economy have to be in a complete stagnation. Do you think this much cheating is possible for BBS in front of all those global financial institutions? They are lending Bangladesh tens of billions of Dollar. Why they would allow themselves to be fooled by BBS? Isn't this sound like a bad joke?

 

[UKBengali]

People are engaging Indian trolls and so this sub-section is half-ruined now. Ignore them and they will go away.

We have some serious inferiority laden complex Indians who are swarming BD subsection like flies. No BD poster probably even looks at the Indian subsection, let alone waste their time posting there I imagine.

India is a "country" that after 74 years of independence is still a 3rd world sh*thole and has been pretty much left behind by BD in all economic and social indicators, despite having a full 24 year headstart in independence.

To think that both Western-led financial orgs and even the Russians would lend BD 10s of billions of dollars suggests that they know something about the BD economy that all these people do not.

As the article highlights, BD needs to work on raising the tax-to-gdp ratio and the only reason it is not now around 10% of GDP is due to the rebasing upwards of BD GDP by roughly 15% in 2017. When you take this into account there is a steady but slow upward increase in the proportion of GDP being collected in revenue by the government.

Going forward, with the move to all digitial systems and the sidelining of cash, this would naturally make it harder for tax evasion and so if nothing else was done by the government then we would still see a slow and gradual upward share of GDP collection by the government in revenue.

 

[bluesky]

Only working on serious changes in the tax system can give long-term results. Unfortunately, the NBR has neither enough manpower nor the expertise to address tax evasion of such magnitude. It is difficult for taxmen to identify the loopholes without having advance training on transfer pricing, money laundering, etc. Therefore, the government should train tax officials to hone their skills and come up with pro-people policy measures and create awareness on developing a culture of paying taxes.

Bold part: The writer suggests that the GoB should train tax officials. But the question is who will train the govt officials who have little knowledge about the modern taxation systems prevailing in the industrially developed countries of the EU and Asia.

I am unable to understand what the writer wanted to suggest. He should have given specific suggestions instead of writing jargons.

 

[Abu Shaleh Rumi]

Why is tax-GDP ratio so low in Bangladesh

Crony capitalism.

and how to rise it?

By suppressing corruption.

 

[SMX 3.0]

People are engaging Indian trolls

The only people to post factual & data-inclusive replies in this forum seem to be those ''trolls''.

Post data about tax to GDP in a thread about tax to GDP ratio. Or post your budget estimates on the revenue collection thread. Or talk about the difficulties in liquid propellant rockets in ''We will develop BMs'' thread.

The response, as expected is whining & outright denial.

Also, with your EYS & MYS and far lower GDP per capita (PPP), you are going nowhere in HDI ranking, definitely not overtaking India.

 

[SMX 3.0]

So far most of the criticism of BBS comes from conservative economists of Bangladesh, one came from a former BBS official. But their criticism is more about expressing general doubt or claim that BBS is manipulating data. They could not come out of any concrete evidence that this is where data is being manipulated and this much.

Here is an article with data, this was already posted on the Unreliable BBS statistics thread.

GDP growth data not credible, says CPD

As per the provisional data of Bangladesh Bureau of Statistic (BBS), Bangladesh posted 5.24% GDP growth in the last 2019-20 fiscal year

www.dhakatribune.com

Industry sector growth rate contributed significantly to the fall in GDP growth, which registered 6.48% growth in FY20 against 12.67% in FY19.

In the manufacturing sector, large and medium scale businesses suffered badly and its growth came down to 5.47% in FY20, which was 14.84% in FY19.

Agriculture sector recorded 2.2% growth, which was 4.1% in the previous fiscal year, while service sector growth came down to 5.32% against 6.78% in the same period, the think-tank explains.

On the other hand, export declined by 51.2% during Apr-Jun of FY2020, while only 76.8% of original ADP was implemented in FY2020.

In FY20, import of capital machinery declined by 33.8%, net FDI declined by 42.5% and revenue earnings dropped by 34.6%.

“So, where did the growth come from,” Fahmida questioned.

BBS' methodologies are already inconsistent with UN & IMF recommendations. Had noticed this discrepancy in BBS' GNI calculation before.

The way BBS currently defines GNI is inconsistent with the recommendations of the United Nations’ System of National Accounts (SNA) and the IMF’s Balance of Payments Manual (BPM).2 Specifically, the problem is that BBS includes worker’s remittances in its estimation of GNI, but according to both SNA and BPM remittances should be included in the broader concept of Gross Disposable National Income (GNDI) and not GNI.

As a matter of reference, it may be noted that Bangladesh’s neighbours such as India, Sri Lanka and Nepal measure GNI in accordance with SNA definitions (Pakistan is an exception), by adding only net primary income from abroad to GDP, and including workers’ remittances in the broader category of GNDI. As a result, in all these countries, GNI systematically falls short of GDP (since primary income from abroad tends to be negative, as in Bangladesh), whereas the opposite is true in Bangladesh because of the way remittances are treated by BBS.

https://www.theigc.org/wp-content/uploads/2017/09/Osmani-2017-Final-report.pdf

Also, the method of adding Domestic savings to the GDP calculation, when it's an ill-defined term.

While presenting national accounts aggregates, BBS provides two different saving estimates corresponding to two definitions of saving – these are called domestic and national saving respectively. A little reflection shows, however, that domestic saving, as defined, is a meaningless concept and should be dispensed with completely.

Even for a rather organized (relatively) sector like manufacturing, BBS' data is based on estimates & decade-old data & do not reflect the actual value-added in the sector.

The most serious limitation, however, stems from the fact, unlike in other sectors such as crop agriculture or construction, estimation of value-added in this sector is not based on firm annual data. The primary source of actual data on manufacturing is the Survey of Manufacturing Industries (SMI), which is currently conducted at irregular intervals – the last one was carried out in 2012, and the previous one in 2005-2006. In the absence of actual annual data, BBS is forced to employ indirect methods. For the registered sector, the base year output values obtained from an old SMI (the current series is based on 2005-2006 SMI) are blown up by an annual Quantum Index of Industrial Production ). The QIIP is based on sources of varying quality; for 65 per cent of industries, QIIP is constructed by soliciting information on total production data collected from respective associations and the Export Promotion Bureau (EPB); for the rest, output and prices are obtained from a relative small sample of firms. Furthermore, input data is based on old input-output ratios since no annual information is collected on inputs in the process of collecting data for the Quantum Index. The value-added estimates are, therefore, largely a synthetic entity that is constructed by combining output and input values that in many cases do not represent actual reported values for any particular year (except for the base year)

Also, there is a dearth of data for GDP calculation.

It has been a recurring theme of this report that the quality of national accounts estimates in Bangladesh has been compromised by the facts that the Survey of Manufacturing Industries (SMI) is now carried out intermittently instead of annually (as before) and a survey of the informal sector such as the Annual Establishment and Institution Survey (AEIS) has not been available since 2002-03. It will be difficult to make reliable estimates of savings by the private non-household sector in the absence of regular surveys of this kind

Also, Bangladesh do not calculate it's GDP quarterly. HIgh-frequency indicators aren't even reported.

Estimation of GDP in Bangladesh needs a reform

Over the past decade, growth rate of the Gross Domestic Product (GDP) has been at the centre of attention of economic policy discourse in Bangladesh. However, Centre for Policy Dialogue (CPD) has also been emphasising that qualitative and distributive aspects of GDP growth are no less important t

www.thefinancialexpress.com.bd

And then there is data that looks very suspicious.

7.12% sectoral share for land transport is greater than that of the entire transport sector in India, for a country with 8500 trucks sold annually. While water transport in what is a riverine country is at just 0.49%?

 

[DalalErMaNodi]

IIT graduate who already patented tharki-giri, future p0rnhub ceo.

 

[Saiful Islam]

Here is an article with data, this was already posted on the Unreliable BBS statistics thread.

GDP growth data not credible, says CPD

As per the provisional data of Bangladesh Bureau of Statistic (BBS), Bangladesh posted 5.24% GDP growth in the last 2019-20 fiscal year

www.dhakatribune.com

Industry sector growth rate contributed significantly to the fall in GDP growth, which registered 6.48% growth in FY20 against 12.67% in FY19.

In the manufacturing sector, large and medium scale businesses suffered badly and its growth came down to 5.47% in FY20, which was 14.84% in FY19.

Agriculture sector recorded 2.2% growth, which was 4.1% in the previous fiscal year, while service sector growth came down to 5.32% against 6.78% in the same period, the think-tank explains.

On the other hand, export declined by 51.2% during Apr-Jun of FY2020, while only 76.8% of original ADP was implemented in FY2020.

In FY20, import of capital machinery declined by 33.8%, net FDI declined by 42.5% and revenue earnings dropped by 34.6%.

“So, where did the growth come from,” Fahmida questioned.

BBS' methodologies are already inconsistent with UN & IMF recommendations. Had noticed this discrepancy in BBS' GNI calculation before.

The way BBS currently defines GNI is inconsistent with the recommendations of the United Nations’ System of National Accounts (SNA) and the IMF’s Balance of Payments Manual (BPM).2 Specifically, the problem is that BBS includes worker’s remittances in its estimation of GNI, but according to both SNA and BPM remittances should be included in the broader concept of Gross Disposable National Income (GNDI) and not GNI.

As a matter of reference, it may be noted that Bangladesh’s neighbours such as India, Sri Lanka and Nepal measure GNI in accordance with SNA definitions (Pakistan is an exception), by adding only net primary income from abroad to GDP, and including workers’ remittances in the broader category of GNDI. As a result, in all these countries, GNI systematically falls short of GDP (since primary income from abroad tends to be negative, as in Bangladesh), whereas the opposite is true in Bangladesh because of the way remittances are treated by BBS.

https://www.theigc.org/wp-content/uploads/2017/09/Osmani-2017-Final-report.pdf

Also, the method of adding Domestic savings to the GDP calculation, when it's an ill-defined term.

While presenting national accounts aggregates, BBS provides two different saving estimates corresponding to two definitions of saving – these are called domestic and national saving respectively. A little reflection shows, however, that domestic saving, as defined, is a meaningless concept and should be dispensed with completely.

Even for a rather organized (relatively) sector like manufacturing, BBS' data is based on estimates & decade-old data & do not reflect the actual value-added in the sector.

The most serious limitation, however, stems from the fact, unlike in other sectors such as crop agriculture or construction, estimation of value-added in this sector is not based on firm annual data. The primary source of actual data on manufacturing is the Survey of Manufacturing Industries (SMI), which is currently conducted at irregular intervals – the last one was carried out in 2012, and the previous one in 2005-2006. In the absence of actual annual data, BBS is forced to employ indirect methods. For the registered sector, the base year output values obtained from an old SMI (the current series is based on 2005-2006 SMI) are blown up by an annual Quantum Index of Industrial Production ). The QIIP is based on sources of varying quality; for 65 per cent of industries, QIIP is constructed by soliciting information on total production data collected from respective associations and the Export Promotion Bureau (EPB); for the rest, output and prices are obtained from a relative small sample of firms. Furthermore, input data is based on old input-output ratios since no annual information is collected on inputs in the process of collecting data for the Quantum Index. The value-added estimates are, therefore, largely a synthetic entity that is constructed by combining output and input values that in many cases do not represent actual reported values for any particular year (except for the base year)

Also, there is a dearth of data for GDP calculation.

It has been a recurring theme of this report that the quality of national accounts estimates in Bangladesh has been compromised by the facts that the Survey of Manufacturing Industries (SMI) is now carried out intermittently instead of annually (as before) and a survey of the informal sector such as the Annual Establishment and Institution Survey (AEIS) has not been available since 2002-03. It will be difficult to make reliable estimates of savings by the private non-household sector in the absence of regular surveys of this kind

Also, Bangladesh do not calculate it's GDP quarterly. HIgh-frequency indicators aren't even reported.

Estimation of GDP in Bangladesh needs a reform

Over the past decade, growth rate of the Gross Domestic Product (GDP) has been at the centre of attention of economic policy discourse in Bangladesh. However, Centre for Policy Dialogue (CPD) has also been emphasising that qualitative and distributive aspects of GDP growth are no less important t

www.thefinancialexpress.com.bd

And then there is data that looks very suspicious.

7.12% sectoral share for land transport is greater than that of the entire transport sector in India, for a country with 8500 trucks sold annually. While water transport in what is a riverine country is at just 0.49%?

View attachment 772319

How much do you charge to type up University essays/dissos? We'd make good money

 

[Black Tornado]

IIT graduate who already patented tharki-giri, future p0rnhub ceo.