Commoners to bear brunt of increased tax: CPD

Centre for Policy Dialogue on Friday said that the proposed national budget for the next financial year 2018-19 would increase tax burden on low and middle-income groups of the society while it offered benefits to well-off people.
Presenting its analysis of the proposed budget at a briefing at Hotel Lakeshore in Dhaka, the think tank, opposed the proposed reduction in corporate tax for banks, insurance and financial institutions saying that it would play no positive role in increasing investment, improving liquidity situation and reducing interest rate.
The decision will rather give a wrong signal to the banking sector, it said.
‘Corporate taxation changes were geared not to stimulate investment but to succumb to pressure from the banking lobby,’ it said.
‘The government should not give the benefit to the banking sector, which has been suffering from indiscipline and anarchy,’ CPD distinguished fellow Debapriya Bhattacharya said at the briefing. 
The think tank found that corporate tax was not the major hindrance to investors rather corruption, bureaucratic complexities, infrastructure and interest rate were the main challenges, he said. 
Muhith in his budget proposals announced reduction of the corporate tax for the sector by 2.50 per cent. 
The decision would lead to a loss of about Tk 1000 crore in revenues, the think tank said. 
Debapriya said that it was a budget of the status quo as it largely reflected the economic policies and tendencies seen in the past one decade.
Replying to a query, he said that there was no problem in adopting election-centric budgetary measures if there were no contradictions.
‘But, you are offering benefits to those, like banks through reducing corporate tax, who finance in elections,’ he said. 
Family control of banks has been tightened without stopping anarchy and same things happened in the case of reducing the corporate tax, he said.
He said that corporate tax should not be lowered without any impact analysis.
CPD suggested that the corporate tax should be reinstated at the existing level for banks and income tax threshold should be increased to Tk 3 lakh.
It also demanded an implementation plan for revenue collection and result-based monitoring and management for the implementation of annual development programme.
CPD distinguished fellow Mustafizur Rahman said that the budget offered various benefits to wealthy groups of people while the tax burden was imposed on low and middle-income groups.
He said that corporate tax should not be reduced without any impact assessment. 
The think tank said that the budget proposed higher growth in indirect tax like VAT than direct tax or income tax which would increase tax burden on low and middle-income people. 
Tax-free income limit for individuals was not raised. A number of proposals, including raising advance trade VAT on import, imposing VAT on ride sharing service provider, increasing VAT on small-size apartments, furniture and VAT on local non-brand clothing, would increase tax burden on common consumers.
CPD also sought clarification of the proposed allocation of Tk 22,491 crore for investments in equities as the purpose of the allocation was not clear.
It also opposed the continuation of undisclosed money legalisation facility and said that the provision should be discarded to stop incentivising tax avoidance and evasion.
CPD executive director Fahmida Khatun, among others, spoke at the programme. 

News Courtesy: www.newagebd.net