The government has been cutting excise duty from bank depositors’ accounts without informing them.
Excise duty had been raised several times in the past, but was mentioned only twice in the budget speeches. The National Board of Revenue (NBR) also had increased excise duty. However, the depositors were not informed in either case.
Former bankers and experts say imposing excise duty on deposits is unlawful. The experts demanded withdrawal of the all types of excise duty on bank deposits.
Prior to introduction of VAT in 1991, excise duty and sales tax were major sources of the government’s revenue earnings.
After the enactment of the Value Added Tax (VAT) Act in 1991, nearly all excise duty was gradually withdrawn except on bank accounts and air tickets.
Former finance minister Saifur Rahman imposed Tk 150 as excise duty on deposited money up to Tk 100,000 for the first time.
After the fiscal 1991-92, the amount of deposit tax increased six times, but it was never mentioned in the budget speech. The depositors always were kept in dark about this tax.
The former deputy governor of the Bangladesh Bank, Khondker Ibrahim Khaled, told the Prothom Alo that protecting money after taxes is the responsibility of the state. Yet the state is taking depositors money in the name of excise duty.
He said the state has no right to do that. It is illegal as well as contrary to the constitution.
Khondker Ibrahim Khaled said “It is like embezzling someone’s legal property. This is certainly illegal.”
Ibrahim Khaled also said that the matter had not been noticed in the past. Now the interest rates are very low. Once this is imposed on depositors, their deposits will fall further.
The proposed budget for the fiscal 2017-18 came under huge criticism since its announcement on 1 June.
According to sources in the finance ministry, if excise duty is imposed on depositors, the government will receive only Tk 925 crore 70 lakh 82 thousand 700 (Tk 9.26 billion approx) in revenue. This is only .31 per cent of total revenue earnings. Out of this, Tk 584 crore (Tk 5.84 billion) will come from small depositors.
If imposition of the new excise duty is finally been cancelled, the government will earn Tk 7.15 billion from this sector. That means the government will get Tk 3.56 billion more as revenue from newly imposed excise duty on bank deposits.
Managing director of the Social Islami Bank, Shahid Hossain, said after the budget speech, he received numerous phone calls from customers. They said if excise duty was imposed, they would withdraw their money.
Everyone demanded a hike in interest rates, he added.
Shahid Hossain told Prothom Alo that the proposed excise duty has instilled fear among the depositors.
“Everybody is worried about the money. Some of them have already visited our branches in this regard.”
Over the last few days, clients have been coming to the branches of various banks wanting to know when the extra tax would be imposed and what their account will cost.
MDs also want withdrawal of the tax
Shah Alam Sarwar, managing director of the IFIC Bank, told Prothom Alo that the small depositors have become confused after the budget speech. It would be better if this tax was withdrawn.
Md Halim Chowdhury, managing director of Pubali Bank, asks where would the people go it the government does not reconsider the matter.
Bank Asia’s managing director Arfan Ali said, “Excise duty is actually imposed to discourage certain products. This type of tax is not applicable for a bank accounts. We demand that it be withdrawn. ”
According to the finance minister’s budget speech, Tk 800 excise duty will be imposed instead of the existing Tk 500 in cases where the balance, whether debit or credit, exceeds Tk 100,000 but does not exceed the limit of Tk 1 million.
“Similarly, Tk 2,500 will be imposed instead of existing Tk 1,500 in cases where the balance exceeds Tk 1 million but does not exceed the limit of Tk 10 million and Tk 12,000 will be imposed instead of existing Tk 7,500 in cases where the balance exceeds Tk 10 million but does not exceed the limit of Tk 5 crore.”
“A total of Tk 25,000 will be imposed instead of existing Tk 15,000 in cases where the balance exceeds Tk 50,” said the finance minister in his budget speech.
According to the central bank sources, there are 81,426,943 bank accounts in the country. A total of Tk 8.99 trillion approximately is deposited in these accounts.
Source: Prothom Alo