Muhith wants review of tax-free status of key economic drivers

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FE Report
The country must review the tax-free status of fast booming capital market, apparel industry and wages earned by migrants if it wants to scale up the government's dismal revenue earning, the Finance Minister said Sunday.
Market capitalisation of the Dhaka Stock Exchange has shot up to $34 billion dollars from $3.2 billion six years back, apparel industry is now worth $12.3 billion and migrants' remittance stood $10.5 in the last fiscal year.
Finance Minister AMA Muhith said all three sectors - the main levers of Bangladesh economy - have been kept out of tax-net for decades, which has handicapped the authorities in its efforts to raise the country's poor Tax-GDP ratio.
"Our capital market has showed a sudden growth. But before taking any step, we have to think whether we are killing the 'golden goose' for getting the 'golden egg'," said Muhith. .
"Garment factories are exempted from all kinds of taxes. The owners only pay income tax and nothing else," he said, adding billions of dollars being remitted every year has also been left untaxed.
"We must rethink whether these sectors should enjoy tax-free status. We seek your opinion in this regard," Muhith told a gathering of tax officials, civil society leaders, experts and media personalities.
He made the comments in a seminar on 'vision 2021, issues and prospects of direct tax' organised by the BCS (taxation) association in a city hotel Saturday.
Muhith said the government was also devising ways to bring the country's informal -- popularly called black-economy under the tax-net.
"Some 40 per cent of the economy remains out of tax-net. We have to think about the informal economy," the Finance Minister said.
Discussions about "black money whitening scheme is not so loud" this year unlike in the past, which is a "positive sign", he said.
Muhith called for raising awareness so that even a decent wage earner pays taxes willingly.
"Everyone should consider tax payment as part of his social obligation and have a feeling to contribute to the state," he said.
He stressed expansion of tax-net up to the upazila (sub-district) level in a bid to raise collection of direct tax income. "Over the years income of people living in upazilas has increased manifold."
He also underscored the need for making tax collection hassle-free, simplify tax system and bring further reforms in the tax administration.
Speakers in the seminar laid emphasis on expansion of tax-net to the grass-root level and making tax payment "as easy as possible" to boost government's revenue income.
Aminur Rahman, a National Board of Revenue member who heads the board's policy department, suggested imposing taxes on new sectors including the stock market.
"Around 65 per cent investment of share market comes from institutions while rest 35 per cent from individuals," he said, arguing that hefty profits being made by institutional investors should be taxed.
He also proposed re-introduction of turnover and property taxes.
Top actor and advertisement agency chief Aly Zaker urged the taxmen to eliminate the "fear factor" that keeps the taxpayers from paying taxes.
Zaker suggested offering incentives to best performing tax officials and the top taxpayers.
He said a number of businesses maintain two different books on their accounts -- audit account and management account-which is nothing but a strategy for tax evasion.
"We have to get rid of this double-book syndrome," Aly Zaker said.
Former adviser of the caretaker government Sultana Kamal suggested including education on taxation in the country's school and college curricula to make people aware of tax payment.
Quader Sarker, the president of BCS Tax Association, presided over the seminar.
The seminar was also attended by National Board of Revenue (NBR) chairman Dr. Nasiruddin Ahmed, establishment secretary Iqbal Mahmud, and other former tax officials.
NBR member Aminur Rahman presented a key note paper in the seminar.