Income tax slabs need review

                                                                                       
The government is now drafting the national budget for the fiscal year (FY) 2015-16, which will be presented before the Jatiya Sangsad after cabinet approval and consent of the honourable President. In the current fiscal year's budget the waiver limit and the slab limit of income tax were not increased; rather a new slab of a higher rate of 30 per cent tax was introduced. The limited-income group and service holders have suffered due to this.
In the rural areas of Bangladesh, hundreds of business persons do not pay income tax at all. Many earn taxable income. But the private service holders in the urban as well as rural areas cannot evade tax as their employers show the salaries in exact figure to have tax for their businesses reduced. The real income of the service holders in Bangladesh has fallen significantly in the last couple of years because of high inflation.
The business communities shift the burden of price increase to the buyers by increasing prices of their products and services. Not only do they shift the burden, they also do not forget to take this as an opportunity to squeeze the buyers and earn more profits. In fact, inflation brings more money to the businesses. But service holders become helpless. They have to bear the brunt of inflation, as their salaries do not increase in conformity with the increase in commodity prices. Consequently, they are made to reduce the quantity of goods purchased and the services they were to enjoy. The fixed-income people are quite unhappy as they keep facing the continuous price rise of all commodities every year.
The pay of government employees is going to be increased in the near future; but those working at non-government entities do not have such encouraging prospects.
The limit of tax-free income should be raised to Tk 300,000. Income tax may be imposed at the rate of 5 per cent from Tk 500,000; 10 per cent from the next limit of Tk 500,000; 15 per cent from the next Tk 500,000; and 20 per cent from the following Tk 500,000; and 25 per cent from the next slab of this amount. The arrangement could be in place from FY 2015-16.
The GDP per capita of Bangladesh has crossed US$ 1,100. The limited-income group should get the benefit with increased purchasing power. Reduced income tax will help them in increasing their real income.
The measure will reduce tax evasion. There is also the urgent need to compensate the government because of the reduced income tax slabs. The authorities concerned should open income tax offices at upazilla level and bring medium-level business people in rural Bangladesh under the income tax net.
It is high time the government reviewed the rates of income tax slabs and reduced the income tax burden on the limited-income groups including service holders.

Md. Ashraf Hossain
8 /A Ramna, Dhaka