SERVICE-holders in Bangladesh had been deprived of reasonable pay since independence. On realising the situation, the present government doubled the compensation packages for public servants effective from July 2015. But the present individual income tax slabs will reduce the increased income of public as well as private service-holders significantly if the tax slabs are not raised. The national budget for 2018-19 financial year is now being drafted by the Ministry of Finance and will be placed in the Jatiyo Sangsad after cabinet approval and consent of the President. At present tax-free income limit is Tk 250,000. Income tax is levied at 10 and 15 per cent for the next Tk 300,000 and Tk 4,00,000 respectively. It is known that in the budget proposal for the next year, 20 per cent income tax shall be levied on the next Tk 500,000, 25 per cent for the next Tk3,000,000 and 30 percent on the next slab.
The current rates of income tax encourage tax evasion. As the limited income earners, service-holders suffer most and that is why the individual income tax slabs should be reviewed in the upcoming budget.
In rural areas of the country hundreds of businesspersons do not pay income tax at all although they earn taxable incomes. But the service holders in urban as well as rural areas cannot evade taxes as their actual salaries are shown in the pay roll. The real income of the service holders in Bangladesh have fallen significantly in the past couple of years because of high inflation. The business community shifts the burdens of increased prices to buyers and in the process earn higher profits. In fact, inflation fetches more money for the businesspeople. But the service-holders are helpless. They have to bear the whole burden of inflation, as their salaries do not increase instantly with increase in commodity prices. Consequently, they have to curtail the quantity of goods purchased and services they need. The fixed income earners are confronted with continuous price rise of essential items every year. Therefore tax-free income limit should be raised to Tk 500,000 and income tax may be imposed at a rate of 5.0 per cent on next Tk 500,000, 10 per cent for next Tk 500,000, 15 per cent on next Tk 500,000 and 20 per cent for the next Tk 500,000 and 25 per cent for the next slab in 2018-19 financial year. Per capita GDP of Bangladesh has crossed US$1,725. Limited income group, service-holders should get the benefit with increased purchasing power. Reduced income tax will help them increase their real income. The measure will also reduce tax evasion. The government should open income tax offices at Upzila level and bring medium business enterprises working in rural Bangladesh under the income tax net.
Md. Ashraf Hossain
120, Cemtral Bashabo, Dhaka-1214.
© 2024 - All Rights with The Financial Express
