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“Someone may be within the tax net but have little taxable income, while others with significant income remain under-taxed. That imbalance needs to be corrected.”

He suggested exploring new areas of taxation, including property and inheritance taxes.

“In most developed economies, inheritance tax is used to address intergenerational inequality. You cannot tackle inequality by taxing income alone; asset inequality is far greater in our country,” he said.

Asset recovery, particularly by bringing back stolen resources and making large defaulters pay, could also provide an additional source of revenue if pursued effectively, he added.

SHRINKING FISCAL SPACE

Debapriya warned that Bangladesh’s fiscal space is narrowing, as operating expenditures continue to rise. The newly elected government will have to prudently consider the recommendations made by the National Pay Commission 2025 under the interim government.

“Salaries, subsidies, and interest payments are consuming revenue budget,” he said.

“Debt stress is now emerging as a major macroeconomic challenge.” Currently, the debt servicing liabilities of the government -- domestic and external -- are almost double the amount of total public expenditure for health and education.

He noted that public expectations from the new government remain high. Some early measures based on electoral commitments may appear to be populist in nature. However, these initiatives are being rolled out in phases and remain relatively contained in fiscal terms, he added.

URGENCY OF TAX REFORMS

Debapriya stressed that delays in tax administration reform, particularly within the NBR, could undermine domestic revenue mobilisation.

“If the reform process is not completed quickly, especially the institutional restructuring, tax collection may suffer at a critical time,” he warned.

He pointed out that both revenue collection and public expenditure will peak during the last quarter (April-June) of the current fiscal year.

“Reducing human interaction, minimising discretionary power, and ensuring transparency through digital systems are essential for improving efficiency and accountability,” he said.

For Bangladesh, he concluded, the way forward lies in realism, discipline, and coherent policymaking.

“We often see policy contradictions-- where one measure offsets another. That reduces overall effectiveness,” he said. Thus, there is a need for consistency and coordination.

“The opportunity is still there,” he said. “But it is narrowing.”

The policy expert urged the finance minister to adopt a pragmatic but structured approach to fiscal reform, stressing the need for policymakers to look beyond immediate pressures.

“My suggestion is simple: take the hard path, but place it within a medium-term budgetary framework -- a three-year horizon. That way, people can be assured that short-term difficulties will lead to longer-term stability,” he said.

“You should not be overly concerned about what happens in just one year. The real focus should be on where the national economy would stand before the next national election, he observed.

Using an analogy, he explained the need for short-term restraint to enable long-term gains.

“If you want to make a long jump, you have to step back first, gather momentum, and then leap forward. This is that moment-- we may need to pull back now to create the space for consolidation and future growth.”

STALLED CAPITAL MARKET REFORMS

Debapriya pointed to the long-standing proposal of offloading shares of multinational companies (MNCs), state-owned banks and enterprises (SOEs) to deepen the capital market.

“This idea dates back to the former finance minister Saifur Rahman’s time, but implementation has been continuously aborted,” he said.

The interim government also gave instructions to bring in shares of profitable SOEs and multinational companies to the capital market. The government and the MNCs each were to offload at least 5 percent of their shares. “But to no avail.”

He attributed the failure to bureaucratic resistance, as officials often benefit from maintaining control over these entities. Offloading the shares would have given the capital market some positive vibes and, at the same time, generated some much-needed resources for the government.

On the expenditure side, he expressed concern over the effectiveness of public spending, particularly under the Annual Development Programme (ADP).

“Many projects are delayed, repeatedly revised, and suffer from poor feasibility studies,” he said.

“Protracted land acquisition process and deficient project management, epitomised by inappropriate project directors, are also common.” There are more than 1300 projects under the ADP, one-third of which are six to eleven years old.

He recommended forming a dedicated review body to weed out the “zombie projects” that have been continuing without meaningful progress.

“There is also a need to appoint skilled project directors and, where necessary, bring in professionals from outside the government,” he added.

Improving the quality of spending, he noted, would increase public trust and tax compliance.