Increase income tax slab-limits

In the proposed budget for 2014-15 financial year the finance minister did not propose increase of free income tax limit from the existing Tk 2,20,000. This frustrated the mid-income group tax payers. The slabs for tax calculation also worries them; that is, tax is levied at 10 per cent on first Tk 3,00,000, and 15 per cent for the next Tk 4,00,000. In the present proposal, 20 per cent income tax will be levied on next Tk 5,00,000 and 25 per cent on the next Tk 30,00,000 and 30 per cent on next remaining amount. The proposed rate of income tax will encourage tax evasion.
In rural areas of the country no businessman or land owners pay income tax,  although they earn taxable income. But the service holders in urban as well as in rural areas cannot evade tax as their employers show the salaries in exact figure to show high expenditure in their business. The real income of the service holders in Bangladesh have 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 they shift the burden, they also take this as an opportunity to squeeze the buyers and earn more profits. In fact, inflation brings more money to businesspersons. The salaried people are helpless. They have to bear the entire burden of inflation. Their salaries do not increase with the increase in commodity prices. Miseries of the fixed earning people thus continue to rise with the rise of prices of commodity.
Should the government address the hardships of the common people, the free taxable limit should be raised to Tk 3,00,00 and income tax may be imposed at the rate of 5.0 per cent on Tk 5,00,000, 10 per cent for next Tk 5,00,000, 15 per cent on next Tk 5,00,000, 20 per cent for the next Tk 5,00,000; and 25 per cent on rest of the amount in the upcoming budget. Per capita GDP of Bangladesh has crossed US $1100. Reduced income tax will aid to increase the real income and thus purchasing power of the limited income group. The measure will reduce tax evasion. The government should open income tax offices at the upzila level and bring medium business communities working in rural Bangladesh under the tax net.
We believe the measures suggested will bring benefit to all. If accepted, it will enhance revenue earnings of the government, and bring much relief to the mid-income group of people.

Mohammad Ashraf Hosain
Bashabo, Dhaka