The government is planning to increase tax collection on the wealth of the very rich people in the country to relieve low-income people under new pressure due to the budget, said an official of National Board of Revenue.
Finance officials said the amount of human resources in Corona has increased as the rich could not go out for travelling and shopping because many countries have closed their borders for overseas travelers to prevent the spread of Covid 19.
That is why the government is going to take initiative to increase revenue collection by increasing the surcharge on the assets of the more wealthy.
In the upcoming 2021-22 financial year, the budget has taken the initiative to increase the surcharge on the assets of the rich by keeping the tax-free income limit of Tk 3 lakh fixed earlier. At present, if the value of net assets is up to Tk 3 crore, no surcharge has to be paid.
After the announcement of the forthcoming budget, if the value of personal net assets exceeds Tk 50 crore, individuals will have to pay a surcharge or asset tax of up to 35 per cent on assets. Currently, the rate is 30 percent. In addition, the government is going to increase the range of payment of minimum surcharge.
According to the new rules, there will be no surcharge of up to Tk 3 crore. 3 crore to 10 crore, 10 per cent, 10 crore to 20 crore, 20 percent, 20 crore to 50 crore, 30 per cent and those with more than 50 crore, 35 per cent surcharge on income tax, a finance ministry official informed.
The current highest surcharge rate on net assets in the country is 30 percent. If the amount of net assets is more than Tk 20 crore, 30 percent surcharge or property tax has to be paid. In addition, if there is more than one motor vehicle or if there is more than eight thousand square feet of house property in the city corporation area, it is also mandatory for the taxpayers to mention that property, the official said.
Finance Ministry officials said the decision was made to increase the range of minimum surcharges for better tax management. They also said that as a result of the new management, the general public will be interested in disclosing information about resources without hiding it.
Wealth tax is applicable in case of payment of income tax at the rate prescribed by the tax authority.
Dr. Ahsan H. Mansoor, Executive Director, Policy Research Institute (PRI), a private research institute, said, ‘First, a surcharge is levied on the land value mentioned in the registration document. The deed value does not match the current value of the land.”
In this regard, he added, "Suppose a person bought a bigha of land in Gulshan in 1960 and built a 10-storey apartment building. If a surcharge is imposed on the price mentioned in the document, this person will remain out of the net. On the other hand, even if another person buys a single flat in the same place for Rs 3 crore, he will have to pay a surcharge.”
He also mentioned that at present, surcharge is determined on income. The surcharge should be fixed on the current value of the assets.
Surcharge is a type of fee that is determined by the deed value of personal assets. However, economists and business leaders in the country feel that the entire surcharge system needs to be reformed. They also commented that it is very important to expand the tax net to provide relief to the existing taxpayers.
Abul Qasim Khan, President of Business Initiative Leading Development (BILD), said, ‘It is a common practice worldwide for the rich to pay high taxes. The addition of a surcharge of up to 35 per cent as well as the formation of a new level of payment of surcharges will help increase tax collection during the epidemic.
The BILD president added, "Tax officials need to make sure that no one can evade taxes." Gradually, everyone with taxable income should be brought under the tax net. '
Meanwhile, according to the latest report of the Central Bank on Wealth, the number of depositors (owners) increased from Tk 1 crore 1 to Tk 5 crore (owner) to 73,875 by the end of December 2020. There are 10 thousand 472 bank accounts of 5 crore 1 to 10 crore. And there are 3,507 accounts in the banks from 10 crore 1 to 15 crore.
1,632 accounts between Tk 15 crore 1 to 20 crore, 1,133 accounts between Tk 20 crore 1 to 25 crore, 725 accounts between Tk 25 crore 1 to 30 crore, 384 accounts between Tk 30 crore 1 to 35 crore, and there are 294 (owner) depositors in the banking sector with Tk 35 crore 1 to 40 crore.
The number of accounts with deposits of more than Tk 50 crore has increased to 1,390 during the period under review, from 1,263 in 2019.
Wealth tax was introduced for the first time in 1963 during the tenure of the then Pakistan period. After independence, the government continued this tax collection system.
In 1986, the government added section 16 / A to the Income Tax Ordinance to perpetuate the surcharge system through the Finance Act. It was withdrawn in 1996-97 under pressure from various groups. However, in the 2011-12 financial year, the government re-introduced the collection of surcharge.