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Reaz added that low tax compliance is driven not only by cultural factors but also by fear of harassment and administrative burdens.

He warned that reliance on customs duties is unsustainable as Bangladesh graduates from least developed country status, noting tariffs still account for 27 to 28 percent of revenue.

“If we had gradually shifted toward direct taxation, we could have used fiscal policy more effectively to address inflationary pressures and rising inequality,” he said.

He said that in the current challenging context, spending Tk 35,000 crore on a new government pay scale would be the wrong decision.

Imran Hassan, secretary general of the Bangladesh Restaurant Owners Association, said current tax assessment methods are ineffective and require full system integration. “All businesses must be brought under the VAT net,” he said, proposing that tax collection be integrated with VAT payments.

He alleged resistance from authorities, arguing that meaningful system reform would reduce opportunities for informal pressure on businesses.

Md Farid Uddin, former member of the National Board of Revenue, said the VAT rate should under no circumstances exceed 10 percent.

The tax reform task force formed during the interim government had also proposed a maximum VAT rate of 10 percent, though several of its other recommendations have since gone unaddressed, he noted.

Rushad Faridi, assistant professor of the Department of Economics at the University of Dhaka, warned that excessive reliance on indirect taxation creates instability in budget execution, as revenues become highly dependent on consumption and overall economic conditions.

“If the economy slows down, fiscal pressure builds up immediately, forcing cuts in essential spending or increased borrowing,” he said, adding that direct taxation provides a more stable fiscal framework.

He also said indirect taxes create a “fiscal illusion,” where people do not fully realise their tax burden, reducing public pressure for government accountability.

Prof M Abu Eusuf, executive director of RAPID, said Bangladesh’s main challenge is not a lack of reform ideas but weak enforcement.

“We all know the problems and solutions. Reform strategies already exist, but without enforcement and a strong commitment, nothing will change,” he said.

Faisal Mahmud, managing editor of The Daily Waadaa, said India’s experience with Goods and Services Tax (GST) and the Unified Payments Interface (UPI) shows how a digitalised economy can strengthen tax administration and expand formalisation.

He urged policymakers to study India’s GST system more closely, saying it offers important lessons for improving Bangladesh’s tax and revenue framework.

AKM Fahim Mashroor, co-coordinator of Voice for Reform, who moderated the event, proposed setting the standard VAT rate at 7.5 percent while introducing a rate exceeding 25 percent on luxury goods.