Tk 2,000 minimum tax discriminatory, contradictory: CPD

The government's plan to impose a minimum tax of Tk 2,000 even on those without taxable income is both discriminatory and contradictory with the concept of a tax-free threshold, according to the Centre for Policy Dialogue (CPD).

"The move is not logically or morally correct," said Fahmida Khatun, executive director of the CPD.

She made this comment while presenting the think-tank's analysis on the proposed Tk 761,785 crore budget for fiscal 2023-24 at the Lakeshore Hotel in Dhaka today.

The CPD said that on the one hand, the government increased the tax-free income limit to Tk 350,000 from Tk 300,000 to give relief to individuals within this bracket.

But on the other hand, the provision requiring a minimum tax of Tk 2,000 regardless of income means that filing of returns will be compulsory even for those whose earnings fall below the zero-tax threshold.

As per income tax rules, individuals have to submit returns to avail 38 services. 

These services include obtaining or renewing trade licenses, borrowing funds of over Tk 5 lakh from financial institutions, opening a postal savings account of over Tk 5 lakh, and purchasing a savings certificate of over Tk 5 lakh.

People who open and continue using bank accounts of any sort with a credit balance of more than Tk 10 lakh will also need to pay the minimum tax.

"Such a move will burden low-income TIN holders and contradict the concept of tax-free income thresholds," Fahmida said.

She went on to say the government should scrap the provision as it would "hamper the main spirit" of increasing the tax-free income limit.

At the event, the CPD said the minimum net wealth exemption limit has been increased to Tk 4 crore from Tk 3 crore, leaving a number of affluent people out of the surcharge net.

While the government is moving to end the zero-tax regime for poor people, it is giving exemptions to rich people, the CPD said.

"Such anomalies are not acceptable for a justified tax policy," Fahmida added.

Prof Mustafizur Rahman, a distinguished fellow of the CPD; Khondaker Golam Moazzem, research director, and Towfiqul Islam Khan, a senior research fellow, also spoke at the event.