Arju Afrin Kathy, Aminul Arifeen and Md Abdul Barik

Bangladesh’s transition toward upper-middle-income status, LDC graduation, and post
COVID recovery requires a significant expansion of domestic revenue mobilization.
However, the country’s tax system remains narrow and regressive, with land-based
wealth expanding rapidly alongside rising income and wealth inequality. Despite being
constitutionally mandated and economically efficient, Land Development Tax (LDT) contributes less
than 0.5 per cent of total tax revenue, reflecting a substantial unrealized fiscal potential.
This policy brief analyses the constraints and opportunities of LDT through an institutional and
political economy lens. It shows how outdated Mouza-based valuation, excessive street-level
discretion, weak audit capacity, and entrenched local power structures undermine effective tax
administration. Situating LDT within broader debates on wealth taxation and urbanisation, the brief
highlights its relevance for addressing inequality and reducing reliance on regressive indirect taxes.
The study argues that technological reforms alone are insufficient and proposes a sequenced reform
agenda centered on market-aligned valuation, administrative accountability, gender-sensitive
governance, and inter-agency data interoperability. Strengthening LDT is essential for expanding
fiscal space, enhancing equity, and supporting Bangladesh’s inclusive and sustainable development
trajectory.