Think tanks for increasing tax on rich

Illustration: TBS

Two leading think tanks in the country have proposed raising taxes on the wealthy while avoiding additional tax burdens on low-income individuals to bolster national budget resources.

The top tax rate for wealthy taxpayers should be reverted back 30% from the existing 25% considering the country's post-Covid economic situation, the Centre for Policy Dialogue (CPD) and the Bangladesh Economic Association (BEA) put forth at a pre-budget discussion held at the NBR conference room in the capital today.

Muntaseer Kamal, research fellow at CPD, said the highest personal income tax rate was reduced in the FY21 budget, and has remained unchanged since.

He said this reduction goes against promoting tax justice and suggested reinstating the highest tax rate at 30% for top earners in the FY25 budget.

Md Aynul Islam, general secretary of the BEA, suggested some for the next budget, such as raising tax rates on the "super-duper wealthy", taxing excess profits, and recovery of laundered money.

He also said reducing taxes on the wealthy does not necessarily spur economic growth, but lowering taxes for the bottom 90% can boost employment and income.

The CPD also proposed increasing tax for non-listed companies by 2.5 percentage points to attract more companies to go public.

'Big players pushing SMEs out of market'

It is difficult for small and medium enterprises (SMEs) to survive now as products manufactured by big industrial companies are pushing them out of the market, National Board of Revenue Chairman Abu Hena Md Rahmatul Muneem said at the event.

SMEs are not able to move forward as their market has been surrounded by big players. There is a point here that big players produce quality products at low costs and also export to international markets, he said.

"But SMEs in other countries still thrive in such circumstances and make quality products. We need to find out why SMEs in Bangladesh cannot flourish, said the NBR chairman.

At the event, SME Foundation Managing Director (Additional Charge) Salahuddin Mahmud presented various proposals from the foundation for the budget in the next fiscal year.

The proposals include formulating separate VAT, income tax and customs regulations for the development of this sector. For this purpose, a preferential tax regime (PTR) can be arranged for SMEs.

It was also proposed to lower the rate of advance tax on import of raw materials from 3% to 1.5% for the SMEs whose annual import value does not exceed Tk5 crore.

MS Siddiqui, vice president of International Business Forum of Bangladesh, said medium enterprises currently pay 5% advance tax.

"Our proposal is to waive advance tax at the import stage or adjust it in a speedy manner. Traders often face various regulatory hurdles to get their refunds. This increases the cost of their business," he added.

Snehasish Barua, a director at SMAC Advisory Services, said it is important to invest in savings bonds. However, new taxpayers often encounter obstacles.

To make the Income Tax Ordinance more user-friendly, he proposed to allow taxpayers  to buy family savings certificates through e-TIN only.

"This means anyone with a new e-TIN can purchase savings certificates without needing to submit proof of tax returns," he added.

At present, proof of return filing is required for the purchase of savings bonds of Tk5 lakh.