Wealth surcharge collection goes up 24pc

The number of rich people who paid wealth surcharge increased 6.71 percent year-on-year to 11,661 in 2016-17, but analysts say the number is still very low.

The wealth surcharge collected by the tax department also increased 24 percent year-on-year to Tk 355 crore in the outgoing fiscal year, according to the provisional data of the National Board of Revenue (NBR).

However, experts said the number of wealthy people having over Tk 2.25 crore in net worth would be much higher than those who have filed wealth information in the tax returns.

The problem lies in the valuation of properties, said Ahsan H Mansur, executive director of the Policy Research Institute.

He said everyone who has homes at Gulshan, Banani and Dhanmondi areas has wealth over the minimum threshold of Tk 2.25 crore, on which the wealth surcharge tax is applicable.

A large number of affluent people remain out of the wealth surcharge net owing to the assessment of their properties at purchase prices instead of market prices, he said.

Thus, those who have bought lands and properties three-four decades ago, continue remain out of the net, according to taxmen and analysts.

On the other hand, the buyers of apartments particularly in Dhaka now-a-days are falling into the category of affluent, according to Mansur.

He said the wealth surcharge has increased the tax burden on those who are already in the tax net. The tax rate goes up to 39 percent for those who pay tax, he added.

He said the existing system of collecting wealth surcharge has already created distortion and it will continue unless the revenue authority stops assessing assets based on the purchase prices.

“The wealth tax should not be income tax surcharge. The value of assets should be calculated based on market prices and be updated regularly. Separately, minimum tax should be imposed based on that,” he said.

The whole wealth tax system should be overhauled and the existing system should be cancelled, he said.

Contacted, a senior official of the NBR preferring anonymity said it is difficult to determine wealth based on market value under the existing income tax law.

Property tax will be needed to introduce if the wealth is determined based on the market value, he said.

The official attributed to the rise in the number of wealthy people and surcharge collection to the taxpayers' compliance and growth in their wealth every year.

New people are coming under the wealth surcharge tax net with the rise in the value of their wealth, he said.

It is a very positive thing to see the amount of surcharge collection and the number of rich people increasing, said Towfiqul Islam Khan, research fellow at the Centre for Policy Dialogue.

The scope is there to collect surcharge from more people if the process for asset valuation is corrected, he said.

He suggested the government establish a real estate price index by collecting data on property prices regularly.

Bangladesh Bureau of Statistics can do the job, he added.

The government introduced wealth surcharge in 2011-12 as an alternative to wealth tax, to ensure equitable distribution of wealth and reduce economic disparity.

In the current fiscal year, the NBR revised the slabs of net wealth and corresponding surcharge rates against wealth.

The government plans to increase the surcharge in the coming fiscal year, Finance Minister AMA Muhith said on Saturday.

Some changes will be brought in different slabs of surcharge by increasing the rates, he said.