Bangladesh struggles to boost tax revenue despite repeated reform efforts

Bangladesh's tax administration has long faced difficulties translating policy reforms into tangible improvements in revenue collection and compliance rates. The country's tax-to-GDP ratio remains significantly below regional peers, reflecting persistent gaps between reform initiatives and on-ground execution.

Analysts attribute the disconnect to several interconnected challenges. Weak institutional capacity, limited resources for enforcement, and inadequate digital infrastructure have hindered effective implementation of successive reform packages. Additionally, informal economic activities continue to operate largely outside the tax net, reducing the potential revenue base and creating compliance inequities between formal and informal sectors.

Corruption and administrative inefficiencies within the tax authority have further undermined reform efforts. Despite periodic modernization drives, collection agencies struggle with staff shortages, outdated systems, and limited inter-agency coordination. These operational constraints have prevented reforms from achieving desired outcomes in broadening the tax base and improving collection efficiency.

Stakeholders note that sustainable improvement requires addressing root causes rather than piecemeal adjustments. Observers suggest that stronger institutional oversight, enhanced technological systems, and coordinated efforts to formalize the economy could help unlock the tax system's potential. Without fundamental changes to implementation capacity and governance frameworks, experts warn that future reform attempts may face similar hurdles.