Muhith suggests mandatory tax on everyone’s income

Finance minister Abul Maal Abdul Muhith on Wednesday suggested introducing compulsory minimum income tax on every citizen having income.
At a seminar on payroll tax and tax net expansion, he also urged civil society members, tax authorities and other stakeholders to create mass awareness in favour of the proposal and said that a public movement was needed in this regard.
‘Everyone, if he or she has income, should pay tax whatever the amount of tax would be — Tk 10, Tk 20 or Tk 50. The practice will facilitate establishing a tax payment culture in the country,’ Muhith said at the seminar organised by the National Board of Revenue at the Officers’ Club in Dhaka.
People who have no income and are dependents will remain out of the purview of the tax, he said.
‘Few years back, I had proposed that the revenue board impose the tax and now I am again repeating the proposal,’ the finance minister said.
Muhith, however, expressed doubt whether the idea would work right away.
‘I know it will not be implemented but I haven’t given up the hope as there is another two/three years in hands to introduce the system,’ he said adding that everyone including civil society members should speak in favour of the tax.
He said it is a matter of shame that only 12 lakh out of 16 crore people in the country pay income tax. The number would be
much higher even only millionaires would have paid tax, he said.
He also urged the private sector employers to deduct payroll tax properly at the time of making payment to employees.
Payroll tax collection from the government officials is now well-regulated but the private sector is still lagging behind, he said.
In Bangladesh, only 4 per cent of total income tax comes from payroll while it is on an average 30 per cent in advanced countries, he said.
To increase payroll tax or tax from salary income, the NBR in the current fiscal year adopted some measures including making e-TINs mandatory for the government employees having basic salary above Tk 16,000, private employees engaged in management, administrative function or in supervisory position in the production function.
Companies will face punishment including fine if they fail to ensure obtaining tax from their employees and filing income tax returns by their staff.
Regarding compulsory minimum tax, Policy Research Institute executive director Ahsan H Mansur said that imposition of the tax would be highly impossible due to political reasons but the NBR could achieve the goal by bringing all potential taxpayers under the tax net.
To achieve the goal, the revenue board should keep the tax-free income limit, which is now Tk 2.5 lakh, unchanged for next 5-10 years, limit the existing tax exemption facility and focus on payroll tax collection, he said.
He suggested that the tax authorities focus on enforcement to make employers compliant on deduction of payroll tax.
‘The NBR can introduce mandatory registration system for all employers, automate the payroll tax system and make having mandatory e-TINs for employees before recruitment,’ he suggested.
The tax authorities may also compel the employers to pay the due tax if their employees do not file returns and don not pay tax, he said.
Bangladesh Comptroller and Auditor General Masud Ahmed suggested that the NBR explore all potential areas including posh areas of cities, land transfer and formal sectors to increase revenue collection.
He also suggested that the NBR become practical and humane in tax collection from payroll as salary is the means of livelihood of employees.
Internal Resource Division senior secretary and NBR chairman Md Nojibur Rahman said two decades ago the government used to urge the international community to give more aid to Bangladesh but now the NBR motivates people to pay more tax as the country is moving towards self-dependency.
NBR members Parvez Iqbal, Ziauddin Mahmud, and representatives from different business organisations spoke at the seminar.
NBR’s large taxpayers’ unit (income tax) commissioner Md Alamgir Hossain presented the keynote paper at the seminar.

News Courtesy: www.newagebd.net