Toward a Middle-Income Tax Structure: A Development Perspective with a Focus on Bangladesh

This paper, originally designed to focus on discovering a suitable tax structure that befits an aspiring LMIE as it advances toward the UMIE status. On reflection, it becomes evident that it is hard to meaningfully deliberate on the composition of taxes without focussing in equal measure on the issue of the size of tax revenue at stake, namely the tax effort. The transition to UMIE must embrace public's demand for a healthcare system fully in compliance with the WHO criteria of UHC, for quality human capital, and for both a physical and IT infrastructure consistent with faster growth over the next decade or so. We explore the probable causes of low revenue effort and an unchanged structure of taxes and their persistence over the recent decades. Finally, we delve into the issues of fundamental reforms of the tax system as well as of the softer aspects of tax reform, namely that of tax administration, evasion and compliance.