How do we ensure quality education for every child, regardless of socioeconomic background? The answer lies in a domain that receives far less public attention than it deserves — tax justice. As the government grapples with rising demands on public expenditure amidst declining international aid, domestic resource mobilisation through equitable taxation offers the most sustainable pathway forward. Tax justice is not just a matter of economic policy; it is a moral and political imperative, especially for financing education.
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Education financing
BANGLADESH has made notable progress in education, including near-universal enrolment at the primary level and gender parity in school attendance. However, the education system still suffers from chronic underfunding, poor learning outcomes, teacher shortages, and inequitable access — especially in rural and marginalised communities.
According to UNESCO, countries should allocate at least 4–6 per cent of GDP and/or 15–20 per cent of total public expenditure to education. In contrast, Bangladesh has consistently underinvested in its education system, spending only about 2 per cent of GDP and around 11–12 per cent of the national budget on education in recent years—well below international benchmarks. The implications are serious: overcrowded classrooms, underpaid teachers, and limited school infrastructure, particularly in char areas, hill tracts, and urban slums.
This chronic underinvestment is not simply a budgeting failure — it is a symptom of a deeper structural issue: insufficient and unjust tax collection.
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The tax puzzle: who pays, who doesn’t?
AT THE heart of Bangladesh’s education financing shortfall lies a dysfunctional tax system. Bangladesh has one of the lowest tax-to-GDP ratios in South Asia, hovering around 7.6 per cent in FY2022–23. This is well below the 15 per cent minimum threshold recommended by the IMF for low-income countries to meet basic development needs. In other words, Bangladesh collects only half of the revenue it should be collecting to support essential public services like education.
But low tax collection is only part of the problem. The bigger issue is how the tax burden is distributed. Bangladesh’s tax system is heavily reliant on indirect taxes such as the Value Added Tax (VAT), which makes up more than 60 per cent of total revenue. These taxes are regressive, meaning they disproportionately impact the poor and low-income households. When a garment worker and a corporate executive pay the same rate of VAT on essential goods, we are reinforcing structural inequality.
In contrast, direct taxes — like personal income tax, corporate tax, and property tax — are underutilised. Less than 2 per cent of Bangladeshis file income tax returns. Tax avoidance and evasion by the elite are rampant. A significant share of high-net-worth individuals and corporations either underreport income or operate in the informal economy with little to no scrutiny. Moreover, tax incentives and holidays for big businesses, especially in the export sector, further erode the revenue base.
In a country where illicit financial flows (IFFs) amount to billions of dollars annually — through trade mis-invoicing, capital flight, and base erosion — it is evident that the wealthiest are simply not paying their fair share. In 2022, Global Financial Integrity estimated that Bangladesh loses approximately $6–8 billion annually through IFFs. That’s more than double the national education budget.
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Linking tax justice and education equity
TAX justice refers to a fair and equitable tax system where everyone contributes according to their ability to pay and where revenues are used transparently to meet public needs. Education financing is one of the clearest moral and social justifications for tax justice. A progressive tax system that ensures higher contributions from the wealthy and corporations can generate the necessary resources to fund inclusive, quality education.
One important approach is taxing the rich more effectively — this includes introducing wealth taxes and inheritance taxes and closing loopholes in property taxation, which could yield significant public revenue. Additionally, reforming corporate taxation is essential. This entails terminating detrimental tax exemptions for large corporations and guaranteeing their equitable contribution through equitable transfer pricing mechanisms and country-specific financial reporting.
Curbing illicit financial flows is also critical. By strengthening trade oversight and customs transparency, Bangladesh could reclaim billions of dollars lost annually through trade mis-invoicing and capital flight. Furthermore, as the digital economy expands, there is a strong case for introducing fair taxation on digital services, including Big Tech platforms and e-commerce businesses that currently enjoy minimal tax liability despite their growing market share.
If even a fraction of the revenue lost to tax abuse and illicit outflows were recovered and reinvested in the education system, Bangladesh could dramatically improve school infrastructure, recruit and retain qualified teachers with competitive salaries, and expand social protection measures for disadvantaged students. The fiscal space needed for transformative investments in education is already within reach — what is required is the political will to pursue tax justice in earnest.
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Who benefits from the status quo?
THE current unjust tax regime in Bangladesh persists not due to a lack of knowledge or solutions, but because of entrenched political and economic interests. Elites who benefit from loopholes, tax holidays and informal arrangements often resist reform. Meanwhile, the voices of those most affected — low-income families struggling to educate their children — remain marginalised in fiscal policy debates.
Moreover, donor agencies and international financial institutions have historically emphasised tax-to-GDP targets without sufficient attention to how the revenue is raised or spent. A singular focus on revenue collection without progressive reform risks exacerbating inequality.
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Education as a public good
THE consequences of failing to address tax injustice are far-reaching. As public education stagnates or deteriorates, families increasingly turn to low-cost private schools and coaching centres, further entrenching educational inequality. Quality education becomes a privilege for the affluent, rather than a right for all.
In marginalised communities — such as haor and char dwellers, ethnic minorities and slum-dwelling children in Dhaka — educational opportunities are scarce. Girls, especially from poor households, often drop out due to early marriage, domestic work or safety concerns.
Investing in education is not just about building more schools — it is about empowering the next generation with the knowledge and skills to thrive in a changing world. It is about breaking the intergenerational cycle of poverty and inequality. This requires robust public financing that only a just tax system can sustain.
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A feminist lens on tax justice
GENDER inequality further complicates the tax-education nexus. Women are underrepresented in formal employment and asset ownership, meaning they pay less income tax but suffer disproportionately from the regressive effects of indirect taxation. At the same time, they bear the brunt of caregiving and unpaid work when public services like schools are underfunded.
A feminist approach to tax justice would prioritise care-based budgeting, reduce VAT on essential goods, invest in gender-responsive education policies (like safe transport and menstrual hygiene), and ensure that fiscal policies centre the lived realities of girls and women. When we talk about tax justice, we must ask: who benefits and who bears the cost?
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Pathways forward
THE call for tax justice and education financing is not new, but it is more urgent than ever. To move forward, Bangladesh must undertake a series of bold and strategic reforms. First, progressive tax reform must be prioritised. This involves broadening the tax base while simultaneously increasing the share of direct taxes. Introducing and enforcing taxes on wealth, inheritance, luxury goods and digital services can help redistribute income and ensure that those with greater means contribute a fairer share to national development.
Transparency and accountability are equally vital. Citizens must have improved access to budgetary information so they can monitor how tax revenues are allocated and spent. This transparency helps build trust in the tax system and strengthens the social contract between the state and its people.
Investing in tax administration is another critical step. The National Board of Revenue needs to be equipped with modern digital tools, adequately trained personnel and greater institutional autonomy to effectively combat tax evasion and improve collection efficiency.
In parallel, education must be prioritised in national budget planning. Bangladesh should aim to increase its education budget to at least 4 per cent of GDP in the medium term, with particular emphasis on expanding support for secondary and technical education, which are key to both individual empowerment and national productivity.
Active engagement with civil society and youth is also essential. Citizens — especially young people — should be empowered to demand fair taxation and quality public education through civic campaigns, public education initiatives and participatory budgeting processes that make governance more inclusive and responsive.
Finally, Bangladesh must leverage international cooperation to strengthen its position on global tax justice. This includes advocating for UN-led tax negotiations, automatic exchange of financial information across borders and robust reforms of corporate tax rules to ensure multinational companies pay their fair share in the countries where they generate value. By aligning domestic action with global advocacy, Bangladesh can pave the way for a truly equitable and sustainable education revolution funded by fair and just taxation.
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The price of inaction
WITHOUT tax justice, education in Bangladesh will remain underfunded and unequal — reproducing the very inequities the sector is meant to dismantle. The path forward requires bold political will, civic engagement, and a shared recognition that taxation is not a burden, but a cornerstone of solidarity and justice.
It is time we connect the dots between the privileges of the wealthy and the dreams of children in the most remote corners of Bangladesh. A girl in Kurigram or Khagrachari should not have her future determined by a billionaire’s tax evasion in Gulshan. A just tax system can lead to a more inclusive, equitable and hopeful future for all. Let us rise to the challenge — not just to reform our tax codes, but to reimagine our social contract. Because education is not charity. It is a right. And rights must be paid for — fairly, justly and by all.
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Musharraf Tansen is a PhD researcher and former country representative of Malala Fund.
