Surcharge-free limit of wealth likely to rise
The government may increase the threshold of surcharge-free net wealth from the coming fiscal year 2023-24 beginning from July – a plan that is likely to reduce the pressure of tax on the upper middle-income people.
At present, an individual does not have to pay any surcharge on net wealth of up to Tk 3 crore.
The ceiling may rise to Tk 4 crore, said a senior finance ministry official.
The National Board of Revenue (NBR) had increased the ceiling to Tk 3 crore from Tk 2.5 crore three years ago.
The disclosure regarding the hike is expected to come in the upcoming national budget which will be announced by the finance minister on June 1.
The tax administration introduced the surcharge in 2011-12 as an alternative to property taxes which is yet to be introduce in Bangladesh.
The ceiling may rise to Tk 4 crore from the upcoming fiscal year of 2023-24, said a senior finance ministry official
The aim was to collect more taxes from the affluent section of society, ensure a more equitable distribution of wealth and reduce economic disparity which has been widening over the years.
Subsequently, it revised the surcharge rate and surcharge-free limit with the collection of the tax rising gradually.
In the first year of its introduction, the NBR got Tk 65 crore from wealthy people, according to the NBR data.
The latest data is not available.
The tax administration got Tk 600 crore in fiscal year 2020-21, slightly higher from the Tk 592 crore collected a year ago.
Around 15,000 individuals paid surcharge in fiscal year 2020-21, up 7 per cent year-on-year, according to the NBR.
The tax authority restructured slabs of net wealth amount and their corresponding surcharge rates in fiscal year 2021-22. It introduced a 35 per cent surcharge on individuals having net wealth of over Tk 50 crore.
During the current fiscal year, the NBR had not made any changes in the structure of the wealth tax surcharge as it retained the slabs of net wealth and the corresponding rates of tax surcharge unchanged.
"…in the present context, I do not see the need for raising the threshold for surcharge-free net wealth. The more affluent section of the society should be ready to share some burden," said Towfiqul Islam Khan, senior research fellow of the Centre for Policy Dialogue.
Khan said the government should rather take steps to ensure that the wealth estimates were done considering the present market values of properties.
"Otherwise, historically a large group of wealthy people will remain out of the wealth tax surcharge rate if such valuations of assets are carried out based on the purchase value," he said.
"It is critical that the government focuses on increasing revenue from direct tax sources, which is more equitable in nature," he said.
Now raising the minimum income tax-free threshold will be the right thing to do in view of very high rises of commodity prices, he said.
"It will give some breathing space to lower income groups. We have also urged to take such a step," he said.