Receipts rise 19pc
Taxmen netted 19 percent higher wealth surcharge in fiscal 2017-18 thanks to increased compliance, according to provisional data of the National Board of Revenue.
However, the growth of collection was lower than a year earlier, when receipts shot up 29 percent.
In fiscal 2017-18, the NBR bagged Tk 446 crore from wealth surcharge, which was introduced in fiscal 2011-12 as an alternative to property tax.
Collection was paltry in the initial days, but it began to increase as the tax authority broadened its net by introducing new slabs of wealth and rates of surcharge.
And until fiscal 2016-17, 11,661 wealthy persons paid surcharge on their net wealth -- a number, which some analysts earlier said, would be less than the actual number of affluent in the country.
At present, people with more than Tk 2.25 crore of net wealth have to pay 10 percent or minimum Tk 3,000 surcharge of their payable income tax.
During the current fiscal year, NBR slapped a new rule that people who have more than 8,000 square feet of residential property in any city corporation, or own a car in his name, will have to pay surcharge. The tax authority brought the changes through budgetary measures for the current fiscal year as it finds that in the absence of valuation of properties based on current market prices, many wealthy persons stay out of the surcharge net by showing the transaction value of their assets acquired decades ago.
But those who bought flats in recent years had to pay wealth surcharge because of purchasing the properties at higher prices owing to asset price spike.
Moreover, since zero value is shown in gifted properties, a number of people have remained out of the surcharge net despite having a huge amount of wealth, said taxmen earlier.
Wealth inequality has increased over the years, said Towfiqul Islam Khan, senior research fellow of the Centre for Policy Dialogue.
“Our estimates suggest that in Bangladesh wealth inequality is much higher than income inequality,” he said, adding that wealth surcharge was a good initiative from the government. However, the declining growth does not commensurate with the reality.
“There is an untapped potential for expanding collection of such surcharge.”
The government will also need to think about introducing a modern property tax, which can contribute to enhancing revenue mobilisation and establishing equity in the society, Khan added.
Wealth surcharge is an alternative to property tax, said Apurba Kanti Das, commissioner of Large Taxpayers Unit (LTU), which logged one-fourth the total wealth surcharge in fiscal 2017-18 out of all tax zones under the NBR.
The existing rule is easy and taxpayers can easily calculate surcharge on their wealth.
The introduction of a property tax may create complexity in the calculation and valuation process of properties and increase the hassle of taxpayers.
Collection will increase this year as more areas have been brought under the wealth surcharge net, he added.