The Economic Reporters’ Forum (ERF) proposed increasing the tax exemption limit for individual taxpayers from Tk3.5 lakh to Tk4 lakh to alleviate the financial strain caused by rising inflation, reports UNB.
ERF President Doulot Akter Mala on Sunday presented the proposal to National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan during a pre-budget meeting at the Revenue Building.
As part of its budget recommendations, the ERF called for reducing the tax burden on middle-class and low-income groups through a refund system via mobile financial services (MFS) for excess taxes paid.
It also proposed that banks refund deducted interest to individuals without taxable income.
The forum suggested capping the tax rate on essential commodities, education materials, and medical equipment at 5 percent.
Besides, it advocated for a separate revenue policy to support small and medium enterprises (SMEs) and facilitate their access to bond facilities.
Other key recommendations included keeping private provident funds tax-free and increasing investment in the healthcare sector by raising taxes on tobacco products.
The ERF also proposed setting the highest individual tax rate between 30 and 35 percent, reducing the VAT rate to 7 percent, and collecting wealth tax based on market valuation.
It stressed the need to shift focus towards direct taxation and implement integrated digitization initiatives.
Highlighting the growth of large businesses in district and city corporations, the ERF recommended establishing Medium Taxpayer Units (MTUs) similar to the existing Large Taxpayer Units (LTUs).
The forum underscored the importance of transparency in tax exemptions, urging the NBR to provide clear explanations and estimates of revenue losses for each exemption.
Regarding Bangladesh’s transition from the Least Developed Country (LDC) category, the ERF called for a structural overhaul of the country’s import tariff system, noting that tariffs remain higher than the LDC average and that little progress has been made on tariff reductions despite years of discussions.
The ERF also emphasized the need for impact analyses of all NBR policy decisions to determine the beneficiaries of tax, VAT, and duty exemptions. It urged increased investment in NBR’s research and statistics division, including hiring skilled personnel to modernize and enhance efficiency.
Addressing banking taxation, the ERF pointed out that a 10-15 percent tax is deducted from interest earned on tax-paid deposits, along with excise duty on bank balances. Given the declining savings capacity of individuals, it proposed withdrawing excise duty on deposits up to Tk 5-10 lakh and reducing the tax on interest income.
To curb fraudulent business loans, the ERF suggested that banks verify business information from the NBR’s database before approving large loans. It noted that many individuals take out significant loans under false pretenses using the names of drivers, janitors, and office assistants, making recovery difficult. Enforcing such verification, the ERF argued, would help prevent loan fraud and enhance revenue collection.
On money laundering, the ERF urged visible progress in enforcing the 2013 Transfer Pricing Law, which was introduced to curb tax evasion and illicit fund transfers.
For export diversification, the forum proposed extending bonded warehouse facilities to other potential industries, similar to those available for the ready-made garment sector.
To promote green industrialization, the ERF suggested maintaining at least a 5 percent corporate tax gap between conventional and eco-friendly factories, arguing that the existing 2 percent tax benefit is insufficient given the additional investment required for environmentally friendly industries.
The meeting was attended by other executive and general members of the ERF.
Bd-Pratidin English/ AM
