Individual tax-free income limit should be increased

Staff Reporter :
The individual tax-free income limit should be increased in order to cope with the higher inflationary pressure, experts said.
They also said sufficient measures to increase revenue collection from director tax are needed for reducing the growing inequality in the country.
If all eligible individuals pay taxes according to their income tax slabs, revenue collection from direct tax would rise to 3.1 per cent of GDP from just around 1 per cent currently, they opined.
The experts came up with the remarks while speaking at a seminar on “Using Direct Taxation to Tackling Inequality and Boost Revenue” organized by Research and Policy Integration for Development (RAPID) and Economic Reporters Forum (ERF) at the latter’s office in the city on Saturday.
Speaking at the seminar, Dr Mohammad Abdur Razzaque, Chairman of the Rapid, said that Bangladesh’s tax GDP ratio is around 9 per cent, which is the lowest in the world.
“The main reason behind it is less proportion of direct tax. It should be increased. Currently 65 per cent is indirect and 35 per cent direct tax. However, the government has taken the initiatives to increase the direct tax 70 per cent and indirect taxes reduce to 30 percent,” he said.
He pointed out that, inequality and low government spending (budget) as a share of GDP is the major problems in our country.
Many countries in the world including India, Bhutan, Malaysia’s government revenue income from direct tax is higher than Bangladesh.
“If we want to achieve high growth and developed country, revenue collection as a proportion of GDP should be increased 17 per cent by 2030 and 21 per cent by 2041,” he opined.
He further said around 2.4 million out of 7.6 million Tax Identification Number (TIN) holders submit returns each year.
Besides, the government should increase the tax free income of individual tax payers because of high inflationary pressure, he said.
Nasir Uddin Ahmed, former chairman of the NBR, said that the government should declare a time frame to achieve the target of 50 per cent revenue from direct tax.
Due to political economy, NBR is lagging behind to increase potential revenue income and many sectors are getting tax holidays and special tax rebates, he said.
“Moreover, as many Members of Parliament (MPs) are businessmen, they want to take advantage of the tax exemption and for this, the government is losing revenues worth around Tk2.5 trillion every year,” he added.
Kabirul Ezdani Khan, Additional Secretary of Finance Ministry, pointed out that the government is losing revenue in many areas like real state and new business Facebook, Amazon, Foodpanda and many other businesses in online platform.  
To increase revenue income, he suggested that, “A major solution tax collection procedure should be automated, establish a taxpayer service wing of NBR and policy reform.”
Rapid Executive Director Dr M Abu Yusuf moderated the seminar while NBR Member (Tax) Mahmudur Rahman, ERF President Sharmeen Rinvy and General Secretary S M Rashidul Islam, spoke at the event.