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Amid higher inflation, the Centre for Policy Dialogue (CPD) yesterday called for cutting duties and taxes, both at import and domestic levels, for key essential commodities to provide respite to low and limited income families.
The independent think tank’s proposal comes at a time when the queue of people at the trucks selling certain essentials at subsidised rates is getting longer with many complaining of returning empty.
State-run Trading Corporation of Bangladesh (TCB) has been selling edible oil, lentil and onion through trucks since February 3 to support low-income people struggling to make ends meet amid lower incomes and higher inflation rates.
The CPD placed the recommendations at a pre-budget discussion at the National Board of Revenue (NBR).
In its proposal, the CPD also suggested the NBR raise the tax-free income threshold for individuals to Tk 3.5 lakh for the next fiscal year from Tk 3 lakh presently, considering the added pressure of the rising food inflation and income erosion induced by the pandemic.
The second slab for personal income tax, which is 5 per cent for an additional Tk 1 lakh, should be increased to Tk 3 lakh to provide a cushion to low-income earners.
It, however, recommended reinstatement of the highest tax rate for individuals to 30 per cent from 25 per cent.
The CPD said the rate, which was reduced earlier, was against the cause of promoting tax justice.
On corporate income tax, it said the tax rate for the one-person company should be set at 30 per cent in line with the tax rate of non-publicly listed companies.
The value-added tax on English medium schools should be removed completely and immediately, according to the CPD.
“Education is not a luxury good, but a merit good which should be encouraged with subsidies and incentives, if possible.”
The CPD said the price of cigarettes are cheap in Bangladesh and suggested the government eliminate tiers of taxation and replace them with a single system.
“Additionally, a specific tax, which is fixed per pack, should be implemented instead of an ad valorem tax, which is determined as a percentage of the retail price.”
The CPD wanted the government to discontinue the scope to legalise the black money as such provisions discourage honest taxpayers and encourage evasion.
To curb the illicit transfer of funds abroad through transfer pricing and trade mis-invoicing, the CPD urged the NBR to strengthen the capacity of the transfer pricing cell.
The CPD reiterated its earlier proposals to initiate wealth and property tax. “Also, an inheritance tax, informed by global best practices, may also be introduced.”
At the event, Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said Bangladesh will face several challenges after it passes the transition phase to become a developing county.
“We need to increase our economic capacity. Bilateral free trade agreements must be considered,” he said, calling for a reduction of tariffs to increase the competitiveness of domestic industries.
At the event, the Bangladesh Economic Association (BEA) proposed an expansionary budget for the next fiscal year and recommended collecting a higher amount of tax from wealthy people to establish justice in the distribution of income.
In its budget proposal the BEA, led by its president Prof Abul Barkat, recommended imposition of wealth tax and taking strong steps to realise black money.
Snehasish Barua, a partner of Snehasish Mahmud & Co, proposed reducing the VAT rate to 10 per cent from 15 per cent to increase competitiveness.
(TDS)
