The National Board of Revenue (NBR) should not both formulate policies and collect revenue, rather a separate, independent and specialised policy wing should be formed, recommended an advisory committee recently.

This should be the first priority when bringing about reforms, said the committee in a proposal to the interim government last week.

The five-member advisory committee was formed by the finance ministry on October 9 to bring about reforms in the NBR, such as speeding up revenue collection and improving services for taxpayers.

The advisory committee members include two former chairmen of the NBR, Muhammad Abdul Mazid and Nasiruddin Ahmed, former income tax members Md Delwar Hossain and Aminur Rahman, and former customs member Farid Uddin.

The separation proposal had also come from International Monetary Fund (IMF) as a part of its $4.7 billion loan programmes.

Businesses have been advocating for the separation for years, citing that otherwise it created an "autocratic" mindset in the NBR.

Since the NBR works with a revenue collection target, it inevitably ends up formulating policies more inclined towards achieving the target and this ends up ignoring detrimental effects that those policies have on taxpayers, explained the businesses.

A white paper committee led by economist Debapriya Bhattacharya, which was formed recently on unearthing the state of the economy, had also spoken on the issue.

"By creating a dedicated policy unit within the Ministry of Finance, the NBR can focus on efficient collection and enforcement, leaving strategic tax policy formulation to a specialised team," it stated.

Earlier, the NBR officials of both customs and tax departments also requested the creation of an "Independent Policy Commission".

However, they emphasised that its officials should be chosen from among them, as the job necessitates having prior experience working in their departments.

"We have recommended it following discussions with businesspeople, development partners and NBR officials to make a better tax system," said one of the advisory committee members yesterday, seeking anonymity.

"Although everybody has welcomed the proposal, the state should be very careful when implementing the proposal. Otherwise, it would not be fruitful," he said.

In 2008, the then caretaker had undertaken the same reform initiative. Later, the elected government did not adopt the suggestion, he said.

"It will depend on the desire of the government," he added.

"We won't explain anything now," said Muhammad Abdul Mazid, a member of the advisory committee.

"We are working (on formulating a number of reform proposals). It will continue as the interim government didn't give any timeframe (with a deadline). We have just submitted our proposal on a single item or issue," he said.

"Our next priority will be automation," he said.

Declining to comment on policy issues, Md Farid Uddin, another member of the advisory committee, said they were now giving a lot of focus on automation.

"Policy separation is one of several reform priorities of the NBR. Even larger issues, such as digitalisation and integration, remain to be addressed," he said.

"Our prime goal is to simplify the tax policy and ensure integration among all stakeholders," he said.

"Although this initiative is a massive task, it will bring immense changes to the tax systems, which will help to reduce tax evasion," he added.

Welcoming the separation suggestion, Shaikh Shamim Bulbul, general secretary of BCS Taxation Association, said, "As a specialised division, we, both taxes and customs officials, have urged to form an independent and separate 'Policy Commission'."

This is to ensure an effective tax system, he said, adding, "We hope the advisory committee has accepted our proposal…We want to see its execution soon," he added.