Dhaka, Nov. 20 -- Bangladesh has significant potential to reduce poverty and narrow income inequality by increasing revenue from direct taxes while reducing its heavy reliance on indirect taxes, which currently make up 67 per cent of total annual tax collection, according to a new study.

The study estimates that if direct and indirect taxes were balanced equally, the overall headcount poverty rate could fall by 1.0 percentage point, from 18.7 per cent to 17.7 per cent. The gains would be particularly notable among the poorest households: poverty among the lowest-income group is projected to decline from 37.2 per cent to 33.2 per cent, while the next poorest group would see a reduction of 3.3 percentage points.

The findings were presente...