Tk 6000cr addl tax can be collected if properly implemented

Staff Reporter :
Income inequality is constantly on the rise over the decades but the wealth inequality rising alarming in the country.

Wealth accumulation per adult increased by 3.66 times between 1995 and 2021 compared to the 1.41times increase in income between the timeframe.
This justifies the need to focus on wealth taxation more than income taxation as well as indicating higher potential for wealth tax collection in comparison with income tax, according to the Centre for Policy Dialogue (CPD).

The CPD proposed imposing inheritance tax in order to reduce wealth inequality, as well as increase revenue collection. The CPD believes if properly implemented the tax has the potential to generate additional revenue of Tk 6,000 crore per year.

In Bangladesh, property tax is only about 0.27 per cent of the GDP, close to the average of African countries.
Likewise, Land tax which is the most important property tax across the globe, contributes to very small share of total taxrevenue in Bangladesh – below 0.50 per cent on an average over the years, distinguished Fellow of the Center for Policy Dialogue (CPD) Dr Debapriya Bhattacharya said, while presenting the keynote paper in a dialogue titled “State and scope of property taxation in Bangladesh” at a city hotel on Wednesday.

According to World Inequality Database, in 2021, the bottom 50 per cent population owned only 4.80 per cent oftotal wealth in Bangladesh compared to the top 10 per cent population, who owned 58.45 per cent of total wealth, he mentioned.

There are six major property taxes in Bangladesh such as land development tax, wealth surcharge, holding tax, capital gains tax, and stamp duty. Among them, in generating revenue the share of Stamp Duty is relatively higher than the others, Dr Debapriya informed.

Property tax obtained from land tax and stamp duty has been constantly declining and been only about 5 per cent oftotal direct tax forthe last five years.
He stressed strengthening property taxes collection as it should be a critical part of ongoing domesticrevenue mobilization effort. ”We need to explore new sources of direct tax,such as inheritance tax” he added.

Addressing the event, Dr Ahsan H Mansur, executive director at the Policy Research Institute (PRI), said, “Automatically the inherited wealthwithout paying any kind of tax increases the wealth inequality. It should come with taxes as direct tax is stagnant, around 33 percent for the last five fiscal years.” “We are working to create a land bank. We are going to introduce a system of Land Ownership Certificate (CLO). We will issue smart card where total information of land ownership will come to the database,” Land Minister, Saifuzzaman Chowdhury said at the same event.

The program was chaired by CPD Executive Director Fahmida Khatun, while Head of Cooperation and Delegation of the European Union to Bangladesh Maurizio Cian, and former Chairmen of National Board of Revenue (NBR) Muhammad Abdul Mazid also spoke.