Ctg city corp moves to increase holding tax by over 500%

Highlights:

• Holding tax may increase by 545.32% to 1,000% 
• Revenue circles have started issuing notices to house owners
• House owners are entitled to appeal if they have any objections
• Experts say holding tax on rents will essentially be double taxation 
• The tax is evaluated every five years

Businessman Minhajur Rahman has been paying a yearly holding tax of Tk20,725 for his five-storey building on a 3.5 katha plot at Chattogram's Nasirabad Housing Society until now.

But, the amount is set to drastically shot up to Tk1,70,000, which is more than 820%, as the Chattogram City Corporation moves to impose an increased holding tax structure based on house rent.

Considering varying property values and rents, the port city dwellers may have to pay a staggering 545.32% to 1,000% more holding tax than before starting this year. 

"Eight revenue circles of the city corporation have already started sending notices to house owners about the new tax rates," Mohammad Nazrul Islam, Chief Revenue Officer (Deputy Secretary) of the corporation told The Business Standard.

Chattogram residents expressed outrage at the city corporation's decision and feared this increased holding tax will add to the burdens of people, who are already reeling under the stress of rising commodity prices.  

Khaled Khan, a building owner in the city's Halishahar Sabujbag residential area, told The Business Standard, "Earlier, holding tax was assessed per square feet while the new rules determines the tax against the rent or income of the building. In this situation, we have no choice but to increase the rent of the tenants."

Even the city corporation Chief Revenue Officer (Deputy Secretary) Mohammad Nazrul Islam said, "It is not possible for many to pay taxes under the new rules."

He added that they will try to relax the tax burden as much as possible given the house owners appeal.

According to the City Corporation Taxation Rules, the tax is determined in the city corporation areas once every five years.

The revaluation of holding and land taxes in the Chattogram City Corporation started in 2016 under then mayor AJM Nasir Uddin, with the process continuing till January 2017 in two phases. The documents were released in August that year.

After the revaluation, the Chattogram City Corporation proposed to collect around Tk851.30 crore in FY 2017-18 against 185,248 holdings.

When citizens launched a movement against the proposal, the late CCC mayor ABM Mohiuddin Chowdhury and former mayor Manzur Alam expressed their solidarity with the movement. Later, the issue of raising holding tax was suspended due to the protest.

But after Rezaul Karim Chowdhury took office as mayor, the city corporatiojn sent two letters requesting the withdrawal of suspension on holding tax given by the Ministry of Local Government. In response to the letters, the government lifted the suspension on 18 January, allowing the city corporation to start collecting holding tax.

The revenue department of the city corporation said that the target of holding tax collection in the budget of 2021-22 fiscal year has been set at Tk183.76 crore. Calculations based on the new tax rules will increase revenue in this sector to Tk851.30 crore.

"In 1986, during the tenure of the dictator Ershad's government, this idea of determining the holding tax on rents came up in a faulty ordinance. Such idea do not exist anywhere in the world," said economist and former professor of Chattogram University Mainul Islam. 

"Rent is the income of the house owner, and for which he is liable to pay yearly income tax. Now, if he has to pay holding tax on the same rental earnings, it will be 'double taxation' on the income, which is against the generally accepted tax policy," he elaborated.

Municipal tax higher in Ctg than in Dhaka

The Chattogram City Corporation currently collects 17% municipal tax that includes 7% holding tax, 3% electricity and 7% for waste disposal.

In comparison Dhaka North and City Corporation collects 12% municipal tax including the same 7% holding tax.

Chattogram residents say they are not getting any necessary services despite paying extra municipal taxes than the capital dwellers.

Hasan Maruf Rumi, Joint Secretary and spokesperson of Chattogram Taxpayer Protection Council, said, "The citizens of Chattogram enjoy less benefits than those of Dhaka and so it is unreasonable to collect more taxes. 

He added that they will soon launch a program on the issue of new holding tax rules.

Mayor Rezaul Karim Chowdhury said, "For legal reasons, we have to start the process of collecting the proposed holding tax. Billing has started for this already. However, if anyone has objections, they can appeal."