Middle class to suffer for increased land tax
Staff Reporter :
The government has raised the rates of tax by almost double on land and flat registration in this financial year which makes property beyond the level of affordability for the low and middle-income people who-seeking a permanent address in city areas.
Experts said in last two years the property price especially flats, residential apartments, plots had increased by nearly 40 to 45 percent due to the increase of raw materials in the backdrop of global economic turbulence.
The newly imposed different forms of gains tax raised to 8 percent from 4 percent in the Rajdhani Unnayan Kartripakkha (Rajuk) ,Chattogram Development Authority (CDA) areas and in other areas, the rate increased to 6 percent from 3 percent makes property further out of reach for the middle class, they expressed.
Under the new measure, the maximum limit for the gain tax raised to Tk20 lakh per katha or 10 percent of the deed value, whichever is higher, up from the previous Tk10.80 lakh and 4 percent, respectively.
In the case of flats, the tax was 10 -12.5 percent earlier, which will be 14-16.5 percent now.
However, tax experts have cautioned that an increase in gains tax on land and property would worsen the existing problems with land purchase.
They suggest imposition of tax on transaction value of land to avoid accumulation
of black money through investment in land.
This fiscal measure may generate tax revenue on temporary basis as the government wants to collect more taxes from well-off people but would not help remove the existing “vicious cycle” and will hurt the middle income group most.
Snehasish Barua, a founding-partner of a professional audit firm , said that the increasing tax on property registration might give a short-term solution in collecting some additional amounts of tax but it will not work out in long-term perspective rather this might increase the size of the informal economy.
He suggested that the minimum value of property for each area ought to be revisited on a periodic basis so that it is in line with the current market price as well as measures should be taken for those middle income people who want to buy flat or plot within their limited income.
Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), criticised the current surcharge calculation method, stating that it allows wealthy individuals to evade surcharges.
Syed Shameem Reza, Managing Director of a prominent Consultants and Development firm, said the government should rather devise fiscal measure to attract investment in the country and discourage capital flight.
He feared a significant hike in prices of apartments as prices of construction materials, including MS rod and cement, have increased substantially.
“Flat sale will go down further if it (price) goes beyond the level of affordability,” he predicted.
