Centre for Policy Dialogue (CPD), a civil society think tank, on Sunday said the government should revisit and rationalise the existing tax incentive structure to ensure ‘distributive justice’.
It also suggested the government stay away from continuing the provision for legalising undisclosed money or wealth in any form, and requested it to consider phasing out the tax holiday while taking into account the renewal of rental power plants.
“We had always opposed the provision of legalising any type of illegal income and facilities. We’re opposing such provision this time, too,” said CPD distinguished fellow Dr Debapriya Bhattacharya.
He came up with the observation at a pre-budget briefing held at Brac Centre Inn in the city where the CPD placed a set of recommendations for the next national budget – 2014-2015 fiscal year.
The economist said a culture of tax evasion emerges with such facilities. “It’s in no way good for the country and such scope only penalises the genuine taxpayers.”
He observed that those who took advantage of legalising undisclosed money did not invest their money in productive sectors.
The CPD recommended that the government must have a plan to ‘phase out’ various types of incentives.
It said it is important to account for, analyse and publish the revenue forgone emerging from various tax incentives.
Commenting on the issue, CPD Executive Director Prof Mustafizur Rahman said it will be prudent to tie the incentives with the intended objectives.
“For example, the recent cut in the advanced income tax at source for readymade garment exports should be tied with implementation of the new minimum wage (for workers),” he said.
The CPD said the government will have to put emphasis on collection of wealth tax surcharge which is particularly important from the perspective of establishing economic and social justice.
The National Board of Revenue (NBR) needs to work out an action plan for FY 2015 to bring tax defaulters and dodgers under tax net and take measures to enforce the plan, it said.
The think tank observed that a number of non-Bangladeshi citizens are working in Bangladesh without any proper paperwork and also without paying the due income taxes.
This issue needs to be investigated and corrective measurers should be put in place, it said.