Govt should focus on income tax instead of VAT
Bangladesh Economic Association proposes 'shadow budget' of Tk 914,789cr
The Bangladesh Economic Association yesterday opposed value-added tax on the ground that it increases disparity in the society.
VAT is an indirect tax that increases discrepancy between the rich and the poor, Abul Barkat, former president of BEA, said at an event where the association proposed a 49-page shadow budget.
He went on to suggest the government put more emphasis on income tax to meet the revenue shortfall instead of increasing the VAT rate.
The government is set to impose a uniform 15 percent VAT on most goods and services available in the country from July 1, doing away with multiple VAT rates and package VAT.
The size of the proposed shadow budget that BEA presented for fiscal 2017-18 is Tk 914,789 crore -- more than double the amount the government is due to place on June 1.
Some Tk 725,312 crore will come from government revenue, which is 79 percent of the total budget. The remaining Tk 189,477 is deficit budget, which will be financed from the banking system and sales of saving instruments.
The BEA cited 21 new sources for increasing revenue, including prevention of money laundering and recovering black money.
Barkat, who presented the shadow budget, recommended the government recover Tk 20,000 crore of black money and add it to its revenue in the upcoming fiscal year.
At the same time, he said the government would be able to add another Tk 25,000 crore to its revenue by preventing money laundering.
The BEA also called for imposing taxes on foreign nationals living in the country.
The government will not need to depend on foreign financing if the proposed revenue sources are implemented properly.
At present, the total number of TIN holders is 30 lakh, which should be 50 lakh, according to the BEA. Only 10 lakh pay taxes, which should be 25 lakh, it said.
Only 46 individuals pay taxes of more than Tk 1 crore or above annually, but the BEA estimated a minimum of 50,000 people are eligible to pay such amount of tax.
Jamaluddin Ahmed, general secretary of BEA, was also present.