Taxation

Abstract

Taxation is a means by which governments finance their necessary disbursements by imposing charges on citizens and corporate entities. Taxation has been precisely defined under Article 152(1) of the Constitution of Bangladesh. Taxation is important because of the many purposes it serves. Tax revenues generated are utilized to maintain a country’s education system, law enforcement, public order, social engineering, subsidies, government operation, welfare funding, pubic services, public utilities, healthcare system and various other constructive areas that protect a nation’s mere existence. The nation’s tax revenue consists of income tax, customs duty, and value added tax (VAT). In this paper we will concentrate on personal taxation or income taxes, because it is one of the primary sources of income for the country. Moreover, Bangladesh has adopted a progressive personal taxation system in which a tax is applied to the incomes of members of an economy at different rates, with people who make more money paying more taxes at a higher rate. Furthermore, the status quo of the personal taxation scenario in Bangladesh, along with the advantages and consequences of the existing personal taxation system is described in detail. Supplementary analysis has been undertaken to criticize Bangladesh’s personal taxation system with the taxation systems established in other countries (United States and Russia). Lastly, an attempt has been taken to suggest recommendations in an effort to eradicate the imperfections and enhance the existing personal taxation system.

Keywords: taxation, Bangladesh, income tax, progressive taxation system, flat tax system

Definition of Taxation:

Taxation in Bangladesh has been discussed in Article 152(1) of the Constitution of Bangladesh. Tax is a fee charged ("levied") by a government on a product, income, or activity. If tax is levied directly on personal or corporate income, then it is a direct tax....