Surcharge on the rich to be eased
The government plans to raise the surcharge-free limit of wealth from Tk3 crore to Tk4 crore from the next fiscal year, according to sources at the finance ministry.
Seeking anonymity, they said the move has been taken considering inflation but the tax rates will remain same as the outgoing fiscal year.
Economists and experts said the government should revise the surcharge calculation method in a way so that wealthy people have to pay more tax in the current economic situation, but the proposed measure will reduce it.
The finance minister will present the budget for the upcoming fiscal year on 1 June.
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According to the National Board of Revenue (NBR), currently rich people have to pay a 10% surcharge if their assets are worth from Tk3 crore to Tk10 crore, or they have more than one car, or own over 8,000 square feet of real estate in the city area.
The surcharge rate is 20% for those whose assets worth from Tk10 crore to Tk20 crore, and 30% for those with assets worth from Tk20 crore to Tk50 crore. Taxpayers with assets exceeding Tk50 crore have to pay a 35% surcharge, according to the NBR.
Policy Research Institute (PRI) Executive Director Dr Ahsan H Mansur told TBS the latest government measure will reduce the number of taxpayers in the country.
According to the National Board of Revenue, around 15,000 taxpayers paid surcharge amounting to Tk600 crore in FY21.
Dr Ahsan H Mansur said surcharge should be calculated based on asset value, not income. If any wealthy individual has no income in a year, he may stay out of surcharge which is justified.
Dr Ahsan H Mansur also said the asset valuation should be based on current market price of assets. For example, if someone bought a house in the Gulshan area 40 years ago, he pays tax on its market value at that time, which is not justifiable. They should pay tax on an estimated current price.
If the government would value assets as per current market situation that will be helpful to realise more revenue, he added.
NBR officials also acknowledged that the number of wealthy people in the country is low due to the evaluation methods which allow valuing assets at purchase price, not at market rates.
"In the given economic situation, wealthy people should take responsibility, and pay higher taxes. From this ground, it is rational to increase the surcharge," Md Alamgir Hossain, former revenue board member for tax policy, told TBS.
Such an additional tax existed even before the country's independence, he said, adding that it was then called wealth tax. In 1996, the government rescinded it and introduced the surcharge in FY11 as an alternative. Initially, the surcharge was applicable on individuals having assets worth above Tk2 crore, which was later increased to above Tk3 crore.
