CPD proposes property, inheritance tax to curb inequality

After starting 100 percent nationwide land development (LD) tax collection through online and cashless system from April 14 this year, Tk 325 crore has been collected in just one month.

While addressing a policy dialogue on the 'Scope and State of Property Taxation in Bangladesh' organized by Center for Policy Dialogue (CPD), a non-government policy research organization at a hotel in Dhaka's Gulshan on Wednesday, Land Minister Saifuzzaman Chowdhury gave the information.

He said in the year of 2019-20, Tk 621 crore was collected from LD tax through manual tax system. In 2021, Prime Minister Sheikh Hasina inaugurated online LD tax system. After the inauguration, around Tk 867 crore was collected during in the year of 2021-22. It indicates that 30 percent of total LD tax was collected online as this online system is responsible for an increase of almost Tk 250 crore.

Expressing hope, the minister said that it will be possible to deposit around Tk 2,000 crore as revenue in the treasury through land development tax in next year.

Saifuzzaman also informed that the draft of LD Tax Law has already received policy approval from the Cabinet as part of the efforts to modernize the land tax system. The draft would soon be submitted to Sangsad for enactment. Taking into account the national economic plan, the draft law proposes to align the payment of land development tax with the current fiscal year (June-July) in the country.

In reference to the land rent waiver of up to 25 bighas initiated by the Father of the Nation, Bangabandhu Sheikh Mujibur Rahman, the first land reformer of independent Bangladesh, the minister highlighted that the land tax rate in our country is determined with consideration for the larger population. Consequently, Bangladesh stands among the countries with the lowest land tax rates.

He also emphasized the necessity of raising capital gains tax and other direct taxes to bolster the tax-GDP (gross domestic product) ratio and drive economic development. The government is actively pursuing this goal.

The minister expressed his view that Value Added Tax (VAT) has made a positive contribution to the country's economy. Additionally, he asserted that the stability of Bangladesh's economy, even amidst the global pandemic, recession, and conflicts in various regions, can be primarily attributed to the continuous governance in the country.

Centre for Policy Dialogue (CPD) Executive Director Dr. Fahmida Khatun moderated the dialogue event while its Fellow Dr. Debapriyo Bhattachariya presented keynote speech on a study titled 'Scope and State of Property Taxation in Bangladesh'.

The study identified three principles for the proposed reform: equity, efficiency, and transparency.
In this study, the property taxes of Bangladesh have been assessed through five dimensions: tax base, exemption, valuation, rate, and administration.

The study recommends the following measures: curbing tax evasion, ensuring accurate valuations, gradually rationalizing tax rates, strengthening tax administration, implementing digitization and MIS processes, improving information dissemination, introducing Alternate Dispute Resolution, reforming the existing provisions of gift tax, bringing the Heba system under gift tax, and introducing property tax Inheritance Tax to strike a balance between income and wealth inequalities.

Wealth inequality is increasing at an alarming rate outpacing income inequality. Income inequality   stands now at 1.4 per cent, but wealth inequality skyrocketed to over 3 per cent.

Member of Parliamentary Standing Committee on Law Ministry Shameem Haider Patwary, Head of Cooperation of the Delegation of the European Union to Bangladesh Maurizio Cian, former Chairman of National Board of Revenue (NBR) Dr. Nasiruddin Ahmed, Executive Director of Policy Research Institute of Bangladesh (PRI) Dr. Ahsan Habib Mansur and Partner of Snehasish Mahmud & Co. Snehasish Barua also discussed.

Rather than introducing new tax categories, the panel of experts proposed boosting revenue by enhancing the efficiency of the current tax system. Their recommendations include simplifying the tax system to make it more comprehensible for the general public, integrating the land registration system with other land service providers under a single ministry, and establishing interoperability between the databases of various government service providers.

They also emphasized the importance of raising citizen awareness regarding tax-related matters.

Senior officials of various non-governmental development organizations, civil society representatives and media personalities were also present on the occasion.