Travel tax might increase by 20-50%

The government has planned to increase travel tax, which will have a direct impact on the overall expenses individuals or businesses incur when planning and undertaking trips.

The National Board of Revenue (NBR), as part of its multifaceted efforts to increase revenue, is moving to raise the tax by 20-50% in the upcoming budget for FY24, officials familiar with the matter told The Business Standard.

Currently, the tax is Tk500-4,000 for each outbound traveller depending on their destination countries and mode of transportation.

"The changes in travel tax and other taxes will be finalised for the finance bill at a budget meeting on 14 May between Prime Minister Sheikh Hasina and NBR officials," said a revenue board official. He wished to remain unnamed as he is not authorised to talk to the media.

"If there is no major change, it will be placed as proposed budget on 1 June," he added.

Economists, however, opined that the government should widen the tax net rather than increase tax pressure as people are already hit hard by inflationary pressure.

"People are under pressure from price hikes. So, sudden increases in taxes will not be rational at the moment," Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development, told The Business Standard.

He believes that no taxes should be imposed on outbound migrant workers. 

The NBR collects travel tax from people travelling abroad, including migrant workers, under the Travel Tax Act 2003. The tax amounted to TK871 crore in FY22.

Syed Md Aminul Karim, former NBR member (tax policy) feels that tax should not be increased on migrant workers and people who go abroad for medical treatment.

"The tax increase, however, is logical from the consideration that it did not increase for the past few years despite sharp depreciation of taka," he told The Business Standard and said the tax should be raised for those who travel to developed countries including those in Europe and America.

According to the data of the Bureau of Manpower, Employment and Training (BMET), Bangladeshi workers migrating to different countries, including Middle East ones, doubled to some 11.35 lakh in 2022. Most workers pay Tk3,000 each.

Travel tax was revised in 2014 for the last time. Currently, people who travel to Saarc countries need to pay Tk500-1,200 each depending on their mode of transportation. The tax is Tk4,000 for each outbound traveller to North America, South America, Europe, Africa, Australia, New Zealand, China, Japan, Hong Kong, North Korea, South Korea, Vietnam, Laos, Cambodia and Taiwan. For other countries, the travel tax is Tk3,000.