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WHILE the National Consensus Commission has dominated headlines with its efforts to forge consensus on critical constitutional issues, the ministry of finance has proposed a seismic shift in the country’s revenue sector: dismantling the National Board of Revenue and the Internal Resource Division to create two new divisions under direct ministerial control. This move, which is also not aligned with the interim government’s advisory committee for reforming the National Board of Revenue, has sparked alarm among stakeholders, with news reports of a bureaucratic rat race for leadership roles in the new divisions already underway. The question looms: will this restructuring usher in meaningful reform, or will it deform the revenue sector, eroding accountability, professionalism and trust between taxpayers and tax officials?

Globally, revenue services, much like defence and foreign affairs, typically operate with a degree of insulation from direct political interference to safeguard their technical integrity and impartiality. However, the proposed ‘Revenue Policy and Revenue Management Ordinance, 2025’ threatens this established principle in Bangladesh. By subordinating revenue administration directly to the finance ministry and enabling admin cadre officers (generalists by training) to occupy both top-level and zonal managerial posts traditionally held by specialised revenue officers, the ordinance risks diluting accountability and crucial technical expertise and inviting politicisation. Income tax, customs, and VAT officials have voiced strong opposition, warning that admin cadre officers may lack the nuanced understanding required for effective revenue management.

Centralising revenue functions under direct ministerial oversight also raises serious concerns about autonomy, a cornerstone of effective tax administration globally. International best practices, such as the United Kingdom’s HM Revenue & Customs (a non-ministerial department) and the autonomously functioning Canada Revenue Agency, highlight the value of independent tax bodies. Similarly, countries in the Asia-Pacific region like Japan and South Korea maintain independent tax administrations, a factor contributing to their above-average tax-to-GDP ratios, as noted in the OECD’s ‘Revenue Statistics in Asia and the Pacific 2024’. In contrast, our finance ministry’s proposed abolition of the NBR, an institution established by the National Board of Revenue Order, 1972, and central to revenue collection for over five decades, risks undermining institutional memory, operational efficiency, and impartiality. Other nations like India (with its CBDT and CBIC), Australia (ATO), and the United States (IRS) have focused on internally reforming their existing central revenue authorities rather than dissolving them, thereby maintaining continuity and specialised knowledge.

The timing of the ordinance is also problematic. Scheduled for promulgation during a period of constitutional reform, it risks creating distractions from urgent national priorities. This reform, with its far-reaching ramifications, requires extensive stakeholder consultation. Implementing such sweeping changes without due process risks undermining their legitimacy, fuelling suspicions of political motives, and further eroding public trust in revenue institutions – trust already weakened by Bangladesh’s low revenue-to-GDP ratio.

The proposed restructuring is also anticipated to impose a significant burden on the public exchequer. Replacing one division (IRD) and fundamentally altering the NBR with two new ministerial divisions will likely escalate administrative costs, from staffing to infrastructure development. More critically, integrating administrative cadre officers into direct tax management roles introduces substantial risks, including diminished accountability and the potential for heightened unethical lobbying. Assigning administrative cadre officers to oversee daily revenue operations could grant them disproportionate authority over specialised customs and tax officers without corresponding accountability mechanisms. While customs and tax officials are responsible for revenue calculation and approval, they might face pressure to yield to unethical lobbying under administrative supervision. Should miscalculations or misconduct occur, administrative officers are less likely to face direct consequences, further eroding accountability and potentially demoralising specialist cadres. This concern is amplified by existing perceptions of administrative cadre officers exerting undue influence over other service cadres and the public. This situation can be seen as part of a broader pattern of ‘elite capture of the state by one cadre’, which threatens meritocracy and institutional diversity.

Instead of pursuing a disruptive and potentially counterproductive overhaul, the government could focus on modernising the existing NBR framework. Globally, revenue agencies have successfully leveraged data analytics, automation, and sophisticated compliance mechanisms to boost efficiency and expand their tax base. Indeed, the NBR itself has undertaken modernisation efforts, including the VAT Online Project, the Integrated VAT Administration System, the ASYCUDA World customs management system, and initiatives towards a National Single Window and e-Payment systems. A more balanced and constructive alternative would be to retain the NBR as the central authority and create specialised revenue policy and revenue management wings within its existing structure, thereby preserving technical expertise and institutional memory and knowledge while fostering targeted reforms.

The ordinance also raises questions about the allocation of responsibilities. Administering revenue laws — covering complex issues like transfer pricing and international customs protocols — requires specialised skills. Entrusting these roles to non-specialists risks suboptimal outcomes. A more effective model would reserve critical decision-making for tax, customs, and economic policy experts, with clear guidelines to shield technical functions from bureaucratic overreach.

Stakeholder engagement is equally critical. Consulting tax professionals, economists and business leaders would ensure reforms are comprehensive and contextually relevant. Drawing on international best practices tailored to Bangladesh’s needs could build consensus and enhance the reform’s credibility. Such a process would also mitigate the demoralisation of revenue cadres, whose expertise is vital to the system’s success.

Bangladesh faces pressing fiscal challenges, from funding development initiatives to improving its revenue-to-GDP ratio. However, the proposed ordinance, in its current form, appears to prioritise disruptive restructuring over substantive progress, risking institutional dysfunction. The government should reconsider this approach, prioritising autonomy, expertise, and inclusive consultation. A revised strategy could involve strengthening the NBR through modernisation, establishing specialised wings, and engaging stakeholders to design reforms that inspire confidence.

The path forward demands thoughtful deliberation and respect for institutional integrity, not abrupt upheaval. Scrapping or significantly revising the proposed ordinance would signal a commitment to transparency, efficiency, and fairness in reforming the nation’s revenue apparatus. By preserving the integrity of its revenue institutions and harnessing proven global innovations, the country can build a robust and equitable fiscal system that supports the needs of a modern economy while upholding democratic values and accountability to its citizens, rather than to specific cadres or political interests.

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ÌýAdnan Arefin is a lawyer specialising in VAT, tax and customs law.