The government can boost the tax-GDP ratio to 16% by July 2029 from the current ratio of around 9% by effectively digitalising the revenue collection system – thereby almost diminishing the need for public debts, officials of the Centre for Policy Dialogue have said.

The government in its previous term had itself set the target of achieving 16% tax-GDP ratio by 2020. Had it been achieved, the government could have financed the entire revenue budget and Annual Development Plan (ADP) for the fiscal year starting in July with domestic resources, CPD said at an event held at a Dhaka hotel Sunday.

Instead, the government allows tax evasions to support vested parties, one CPD official alleged, and resorts to extensive borrowing to fill the gap.

About $32.6 billion in excess revenue can be generated every year during the next four years through proper digitalisation as the process would help reduce tax exemptions, evasions, and avoidance by eliminating the role of opportunistic tax collectors.

The additional $32.6-billion sum itself amounts to 5% of the country’s GDP.

There are some basic online tax collection procedures, but it has to be made more interoperable to reap the full benefits of digitalisation, CPD officials said.

The country’s tax-GDP ratio is woefully low compared with its neighbours and the rate of its own economic growth. The country’s gross domestic product and per capita income have increased significantly over the past decades, but policymakers have failed to capitalise on the new income.

Ironically, the country’s tax-GDP ratio has rather fallen in the past decade hitting 8.26% in the last fiscal year, down from nearly 11% in 2010. The country’s present 9.99% target is also unlikely to be met.