Government's revenue board is examining the possibility of introducing property tax from the next financial year.
Officials said the income-tax wing of the National Board of Revenue (NBR) have got down to work following a recent directive from the finance minister to examine the pros and cons of levying tax on property of the well-off.
Finance Minister AMA Muhith instructed the taxmen to examine the prospects of introducing the property tax from financial year (FY) 2015-16 by replacing the existing surcharge on wealth.
Officials said the issue of introduction of property tax is still under review as taxmen think the process may prove to be complex one.
It would be a difficult job to conduct valuation of property at current market prices since the tax department does not have any separate valuation department, they said.
In the current FY budget, neighbouring India scrapped the property tax act through finance bill-2015 and introduced surcharge, like in Bangladesh.
Former income-tax member Aminur Rahman said implementation of property tax needs some mechanisms for its successful enforcement.
"We had wealth tax for 1963-1999 period. The government scrapped the law after it had found poor compliance and an insignificant amount of revenue from the measure," he said.
In 1999, he added, the taxation measure was withdrawn after the tax authority had got a poor collection, worth Tk 80 million, in revenue from wealth tax across the country.
In 2011, the NBR imposed surcharge at 10 per cent on the taxpayers having net asset above Tk 20 million.
Mr Rahman said the existing system can be revised and fine-tuned to make it more effective instead of introducing property tax.
"If the government desires to impose property tax, it could be handed over to the local government as it is collecting holding tax. But there might be resentment on double taxation on same property," he said.
On holding tax, Policy Research Institute (PRI) Executive Director Dr Ahsan H Mansur said property tax could be introduced by replacing the holding tax.
"Introduction of property tax is necessary to discourage investment in non-productive sectors, but the current context is not prepared for accepting the tax from FY2015-16," he said.
There must be political vision and preparedness of the government before introduction of the property tax, he added.
In 2013-14, the government received some Tk 2.08 billion in tax as surcharge from the well-off people having net asset above Tk 20 million. However, the tax collection doubled in a year although the experts had raised their eyebrow over an insignificant number of people, some 10,000, having shown net asset above the stipulated limit.
Under the existing surcharge provision, people having net asset above Tk 20 million to Tk 100 million have to pay 10 per cent surcharge in addition to normal payable tax. Surcharge has been imposed at 15 per cent on net asset above Tk 100 million to Tk 200 million followed by 20 per cent for above Tk 200 million to Tk 300 million and 25 per cent for above Tk 300 million.
The former income-tax member said the existing system has a "win-win" situation for both taxpayers and taxmen as there is no dispute on valuation of property in the system.
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