Published: Friday, May 31, 2013

Target tobacco, the rich

Tax office eyes higher revnue

Target tobacco, the richThe National Board of Revenue (NBR) may increase tax on tobacco products and on richer people in the next fiscal year.
The corporate tax rate on listed and non-listed cigarette companies may be hiked by 2.5 to 5 percentage points.
At present, the tax rate for publicly traded cigarette companies is 35 percent while that for non-publicly traded companies 42.5 percent.
Besides, the tax at source on bidi (handmade cigarettes) may also be increased from the current 6 percent to up to 10 percent.
An NBR official said the government would increase the tax rate and make anti-tobacco act stricter with a view to discouraging smoking.
On imposing more tax on richer people, he said the 10 percent surcharge on net assets over Tk 2 crore would remain unchanged, but it might be increased to 15 percent for those having assets over Tk 10 crore.
Currently, anybody having net assets over Tk 2 crore paid 10 percent surcharge, added the NBR official.
The government had been considering collecting more tax from the wealthier section, he said, adding that the tax-free income limit in the individual category might be increased, as in the first-half of the next FY, would be the parliamentary elections.
At present, the tax-free income limit is Tk 2 lakh. This may be increased to Tk 2.20 lakh to Tk 2.25 lakh in the next budget.
For women and disabled people the tax-free income limit may be increased by Tk 25,000 to Tk 50,000.
The existing minimum tax of Tk 3,000 at municipal areas may be decreased to Tk 2,000 for district towns and to Tk 1,000 for areas outside the district towns.
The NBR official said that at present only 10 lakh people paid income tax. In the next FY, to increase the tax net the NBR would conduct drives at upazila level. For this the government was considering to lower the minimum tax outside the municipal areas, he added.
The tax on savings instrument may be lowered in the next budget to make it more effective.
In the current FY, the government’s target of borrowing from savings instrument was Tk 7,400 crore, but in the first nine months only Tk 692 crore has been the net borrowing. As a result, the government’s bank borrowing is on the rise.
Meanwhile, the 10 percent tax at sources on savings with post offices may be lowered to 5 percent in the next budget.
For Pensioner Savings Certificate, the 5 percent tax deducted at source may be waived. For Family Saving Certificate, up to Tk 10 lakh may be made tax-free.