Let me begin with optimism — not the empty kind that papers over hard truths, but the earned kind that comes from reading history carefully. Raising Bangladesh's tax-to-GDP ratio from 6.7% to 12% by 2030 has been done before, by countries starting from worse positions. It is hard. It requires sacrifice from people who would rather not sacrifice. But it is entirely achievable — if Bangladesh decides it wants to.

The decision is the thing. Not the plan, not the technology, not the institutional restructuring — though all of these matter. The foundational requirement is a collective decision, across government, business, bureaucracy, financial institutions, and citizens, that the current arrangement — where the state runs on borrowed money while a large portion of taxable income goes uncaptured — is no longer acceptable.

That decision has not been made. Four decades of Five-Year Plans have included tax reform as a priority. Every government since independence has recognised the problem and pledged to address it. None has. The tax-to-GDP ratio that stood at around 7–8% in FY2013 is lower today than it was then. This is not a resource problem or a knowledge problem. It is a will problem — and will problems, unlike technical problems, are solved by choosing differently.

This article makes the case that Bangladesh should make that choice now, explains exactly what it will require from each stakeholder, draws on the experiences of countries that have succeeded, and offers a step-by-step action plan with specific deliverables, timelines, and owners. It is written with optimism about what is possible and honesty about what it costs.

01 / The Numbers: How Deep the Gap Really Is

Bangladesh's tax-to-GDP ratio was 6.7% in FY2025 — and is declining, not rising. The NBR collected Tk 3.70 trillion against a revised target of Tk 4.63 trillion, a shortfall of Tk 926 billion. The board has missed its annual target every single year for over a decade. NBR Chairman Abdur Rahman Khan has acknowledged plainly: without fundamental reform in revenue administration, any substantial increase in collections is "almost impossible."

The diagnosis is well-established. The real problem lies not in tax rates — which are comparable to, and in some cases higher than, peer countries — but in a complex and distortionary tax system characterised by multiple tax rates and large and regressive exemptions on VAT and income taxes. Tax exemptions are estimated to be nearly as large as actual tax collection itself.

The structural picture is equally stark. Bangladesh's income tax base is extraordinarily narrow — only an estimated 30–35% of registered TIN holders actually pay taxes. Import duties, which are declining as Bangladesh approaches LDC graduation, still account for a disproportionate share of revenue. The NBR Chairman is correct: the existing structure, which places the same tax burden on the rich and poor alike through import levies, is neither sustainable nor equitable.

Bangladesh's 6.7% sits far below all regional and aspirational comparators. The 12% target is where India currently stands and close to what Rwanda achieved after a decade of deliberate reform.

Why 12% and why by 2030? Because 12% is the threshold at which Bangladesh can begin to self-finance its development needs without structural dependence on external borrowing. It is what India achieves today. It is what Rwanda reached after ten years of deliberate reform from a starting point comparable to Bangladesh's. It is ambitious enough to require real change and achievable enough to not be fantasy.

02 / It Has Been Done: Three Countries That Got There

Scepticism about Bangladesh's ability to raise its tax ratio is understandable — the country has been trying and failing for forty years. But that scepticism overlooks three important case studies: Georgia, which doubled its revenue as a share of GDP in eight years after a post-revolution mandate; Rwanda, which built a digital revenue authority from almost nothing and reached 16.5% of GDP from a base of 8.5% in 2000; and Indonesia, which executed a structural self-assessment revolution that remains the template for large developing economies.

Bangladesh's target is more compressed than any predecessor. Georgia achieved more, faster — but had the advantage of a post-revolution political mandate. Bangladesh's new elected government provides a similar window of opportunity.

The comparison is both humbling and motivating. Bangladesh's compressed timeline is harder than any of these examples. But Bangladesh also starts with advantages none of them had: a mature mobile financial services ecosystem, a digital national ID system, and a young, tech-native population. The tools are better. The clock is simply tighter.

03 / The Honest Assessment: Where Bangladesh Actually Stands

Optimism must be paired with honest diagnosis. Bangladesh's revenue system has four structural problems that go beyond policy design into institutional culture and political economy.

The exemption mountain is as big as the collection itself. Tax exemptions are estimated to be nearly as large as actual tax collection. Bangladesh is, in effect, collecting half of what its own tax code says it should. These exemptions are the accumulated result of sector-by-sector lobbying over decades — each one rational from the perspective of the industry that secured it, collectively devastating to the revenue base. Rationalising them will create losers. Those losers will push back. This is where most previous reform efforts have died.

The NBR has been used as a political instrument. Tax assessment has been weaponised — used to harass political opponents and reward allies. Tax officers have been transferred, promoted, and penalised based on political considerations rather than performance. The NBR's institutional credibility with taxpayers is low as a direct result. No amount of e-filing investment can fix this without genuine independence and an integrity framework that protects officers from political pressure.

The informal economy is enormous and growing. Bangladesh's informal sector — estimated at 40–50% of economic activity — exists largely outside the tax net. Formalising it cannot happen through enforcement alone. It requires making formal registration genuinely beneficial: access to credit, legal protections, and government procurement opportunities. The stick without the carrot produces evasion, not compliance.

Willingness is the honest constraint. Every economist, every policy paper, every Five-Year Plan agrees on what needs to be done. What has been missing — for forty years — is the political willingness to do it. The NBR Chairman's own words — that without fundamental reform, any substantial increase is "almost impossible" — are a diagnosis that points directly at will, not capacity.

The Catch-22 Razzaque describes is real but breakable. Georgia broke it after a revolution. Rwanda broke it as part of a national reconstruction project. Bangladesh's post-election moment — with a new government carrying a democratic mandate — is the closest equivalent opportunity the country has had in a generation.

04 / The Compact: What Each Stakeholder Must Give — and Receive

A fiscal compact is an agreement — explicit or implicit — between a state and its citizens and institutions about shared obligations and shared benefits. Every successful tax reform in modern history has involved some version of this compact. Bangladesh has never had this compact at the required scale. The table below states plainly what each stakeholder group must give up during the transition — and what they receive in return. There are no free rides.

This compact will not be comfortable. It will be resisted. That resistance is not evidence that reform is wrong — it is evidence that the current arrangement has beneficiaries who profit from it. The function of political leadership in this moment is to make the case, publicly and repeatedly, that the status quo is the greater risk.

Each +1pp ≈ Tk 560–600 billion in additional annual revenue. The reform path vs. business-as-usual scenario.

06 / A Closing Word: Taxes Are the Price of Civilisation

Oliver Wendell Holmes wrote that taxes are the price we pay for a civilised society. He was not being poetic — he was describing a transaction. Citizens give the state money; the state gives citizens security, infrastructure, healthcare, education, and the rule of law. When that transaction is honoured on both sides, compliance follows naturally. When it is not — when the state collects but delivers nothing, or when elites escape while ordinary citizens pay — the social contract dissolves and evasion becomes, in a real sense, rational.

Bangladesh's current situation involves failures on both sides. The state has not consistently delivered services proportional to its demands. Many elites have not paid proportional to their wealth. And ordinary citizens, watching both dynamics, have concluded that taxes are for someone else. Breaking this equilibrium requires action on both sides simultaneously — which is why the compact framing matters. It is not enough to demand more compliance without demonstrating more return.

The NBR's own strategy document acknowledges that Bangladesh gets unusually high returns from tax system investments. That is not a problem statement. It is an opportunity statement. The digital infrastructure exists. The mobile money penetration exists. The demographic concentration in formal employment is growing. The political moment — a new government with a fresh mandate — is the rarest ingredient of all, and the most perishable.

Georgia did it after a revolution. Rwanda did it as part of a national reconstruction. Bangladesh does not need a revolution or a reconstruction. It needs a decision — shared across government, business, finance, and every citizen who uses a road, sends a child to school, or ever needed a hospital — that the current arrangement is not good enough, and that 12% by 2030 is not an aspiration but a contract.

The compact is available to sign. The question, as always, is who goes first.