It seems clumsy but would expand tax net
Implementing a minimum tax of Tk2,000 instead of having zero tax can introduce certain administrative complications and might initially appear to be a clumsy and narrow-minded decision. However, in the long run, this measure is expected to expand the tax base by including more individuals within its purview.
It is important to note that the process of filing tax returns itself incurs a cost, especially for a significant number of taxpayers who lack the knowledge or resources to do so independently.
For those who are living under the tax-free income threshold, paying a minimum tax of Tk2,000 means that these citizens who have Taxpayer Identification Numbers (TINs) have to pay this amount to get any services.
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At present, proof of tax return submission is necessary for 38 government and private services, but gradually this requirement is expected to extend to all services.
This initiative by the tax administration might be aimed at bringing a larger portion of the population under the tax net since many individuals currently remain outside its purview.
Previous attempts to bring more people into the tax net, including tactics based on fear and threats, have proven unsuccessful.
As a significant number of individuals claim to have no taxable income, they will now need to provide evidence of this in order to access certain services.
The tax administration is taking these steps to expand the tax base, as recommended by the International Monetary Fund (IMF) to increase the tax-to-GDP ratio. It is essential to address the growing burden on taxpayers caused by individuals who travel by air but avoid paying taxes.
