Friday, 29 September, 2023

Minimum income tax irrational

Although the proposed national budget for 2023-24 fiscal is visionary and progressive on many accounts, as we pointed out in our preliminary reaction yesterday in this column, the fiscal outlay is likely to take people from all walks of life to a rollercoaster ride of taxes. In announcing the budget for the next fiscal year, the finance minister proposed a minimum income tax of Tk 2000 for individuals who are required to submit income tax returns to avail various government services even if they don’t have taxable incomes. On one hand while the minister proposed to raise the ceiling of tax-free income to Tk 3.5 lakh, he proposed a provision of minimum tax on the other hand. Experts think it is conflicting to have a tax-free income limit and the provision of minimum tax at the same time.

We think it is unjust and illogical to tax a person who is not liable for tax. Low-income people who have taxpayer identification numbers (TIN) will be under pressure if the provision of minimum tax is implemented. And the people will think twice before taking the TIN certificate. How an individual without taxable income will pay a minimum 2000 taka as income tax? We, therefore, demand the proposal of imposing minimum tax on TIN holders be scrapped.

The government has a clear policy of widening the tax net to increase revenue collection, and we are not against it. There is no alternative to collecting more taxes, or bringing more people under the tax net, for the sake of the country’s development. But we must consider the common people’s capacity to cope up with the undeniable impact of imposition of such a steep hike in taxes. Moreover, the proposed budget is likely to make the cost of living too expensive to bear for the lower and middle income people as there is no clear policy to rein in inflation.

The fallouts of Covid-19 pandemic followed by the Ukraine-Russia war are taking a heavy toll on the income of common people. More recently, the skyrocketing price hike has significantly reduced people’s real income and ruined their purchasing capacity. Additional burden of tax in various forms will only increase the common people’s misery.