Wealth tax growth belies rising number of the rich

The growth in collection of wealth tax from rich people slowed in the last fiscal year despite a significant rise in the number of such people.
The collection of taxes from wealthy people in the form of surcharge posted a slower growth of 15.10 per cent in the fiscal year (FY) 2017-18 compared to the figure of the previous FY.
The collection of wealth tax, known as wealth surcharge, grew by 28.45 per cent in the FY 2016-17 compared to that of the previous year.
Experts and economists said the slower growth in wealth tax collection last fiscal attested to the fact that somehow the wealthy people were averting the payment of such taxes despite their higher wealth accumulation.

According to the 'World Ultra Wealth Report, 2018' of New York-based research firm Wealth X, the number of ultra-wealthy people grew fastest between 2012 and 2017.
It said the number of ultra-high net-worth (UHNW) individuals in Bangladesh increased by 17.3 per cent during the period.
UHNW individuals are defined as people with investable assets of at least $30 million each, usually excluding personal assets and property such as primary residences, collectibles and consumer durables.
The recent data available from the National Board of Revenue (NBR) shows the government received Tk 4.46 billion (446 crore) in wealth tax in the FY 2017-18 against Tk 3.87 billion in FY 2016-17.
In the FY 2015-16, the government received a total of Tk 3.01 billion in wealth surcharge from such well-off people.
The NBR compiled the wealth tax data available from about 31 tax offices across the country.
The wealth surcharge is applicable to the payable amount of income tax at a rate prescribed by the tax authority.
Analyzing the data, the FE found that nearly one-fourth or 24.14 per cent of the wealth tax came from the taxpayers under the Large Taxpayers Unit (LTU) of the NBR in the last fiscal year. The flow showed an upward trend compared to the collection from other tax zones.
Large taxpayers contributed around Tk 1.07 billion in wealth surcharge in the last FY out of the total of Tk 4.46 billion.
In the FY 2016-17, the large taxpayers' contribution was 20.74 while the figure was 19 per cent in the FY 2015-16.
People having net wealth above Tk 22.5 million (2.25 crore) are required to pay surcharge as per the Income Tax Ordinance.
Currently, the surcharge on wealth is collected based on five slabs of rate with 10 per cent or a minimum of Tk 3,000 being the lowest and 30 per cent the highest.
The government has incorporated new measures in the existing budget's wealth surcharge. An owner having two cars or residential property measuring over 8000 square feet will have to pay surcharge at a rate of 10 per cent on net wealth.
Tax officials said there should be valuation of property based on current market prices.
Experts said the existing tax measure was not working properly in netting in the wealthy people.
Dr Ahsan H Mansur, Executive Director of the Policy Research Institute of Bangladesh (PRI), has said currently wealth surcharge is imposed on the newly-accumulated wealth while a vast majority of elite land-owners, who inherited or owned property long ago, remain out of the net.
For example, buying a new apartment at Tk 25 million will be subject to wealth surcharge while a person owning Tk 250 billion landed property purchased long ago is not in the wealth tax net.
The government should frame a value-base to impose property tax, in its true sense, on the basis of area or zone, he added.
"Value of property at notional price should be different in the upscale areas like Ghulshan, Banani, Dhanmondi from that at Mohammadpur," he said.
Dr Mansur also suggested raising the base of wealth tax by slapping a lower rate initially.
He also recommended lowering the ceiling for flat owners to 3,000 sq feet for setting eligibility for paying wealth surcharge.
However, officials expressed their optimism that collection of wealth tax might increase in the current fiscal year due to the new budgetary measure.
The NBR introduced wealth surcharge in the FY 2011-12 in a bid to ensure equity in the society. The collection was Tk 650 million in the FY 2011-12.
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