Reinstate highest income tax at 30% for top earners: CPD

Centre for Policy Dialogue (CPD) has proposed the National Board of Revenue (NBR) to reinstate the highest personal income tax at 30 per cent for the country’s top earners in the budget for the fiscal year 2024.

CPD has argued that the reduction of the highest tax rate (from 30 per cent to 25 per cent) was against the promotion of tax justice.

Besides, it has suggested that the tax-free income threshold for personal income should be raised to Tk3.50 lakh, considering the added pressure of rising commodity prices, particularly those of food items.

The think-tank submitted the budget proposals at a pre-budget discussion meeting organised by the revenue board in the capital’s Agargaon area on Tuesday.

CPD said, “In the FY23, personal income tax (PIT) structure has remained generally unchanged from the one introduced back in the budget for FY2021.”

It added that alternatively, the second slab for PIT which is 5 per cent for additional Tk1 lakh should be increased to Tk3 lakh to provide a cushion to limited-income earners.

CPD also opined that in the budget for FY2023, the rate of investment tax rebate has been fixed at 15 per cent on an eligible amount which meant that higher taxpayers and top earners get higher tax rebate benefits whereas those with annual income below Tk15 lakh will not get any additional tax benefits.

To this end, CPD proposed that withdrawal of this provision needs to be considered in the budget for FY2024.

Moreover, the think-tank in its pre-budget proposal said that although duties and taxes on sugar were reduced recently, their analysis showed high taxes on at least 28 imported essential food items.

“We propose that such taxes on essentials and other relevant commodities should be reconsidered, especially in view of the cost-of-living crisis prevailing in the economy at present.”

It added: “The right to education is a basic human right and education should be made accessible and affordable for all individuals in a country. While the government has exempted Bangla medium schools and later private universities from paying VAT on tuition fees, 5 per cent VAT on English medium schools continues.”

“It is often opined that English medium education is a luxury good and the students who study at English medium schools belong to affluent families and do not stay in the country in the long run.”

“Obtaining education, irrespective of source, is a basic right and should not be misconstrued as a luxury good,” CPD argued in its proposal.