Corporate tax rate to be 'revisited' in upcoming budget: Finance adviser
Direct taxes will be prioritised in the next budget over indirect taxes to reduce economic inequality, he said
Highlights:
- Adviser says direct taxes will be prioritised over indirect taxes
- Plans afoot to reduce tax exemptions for various individuals and sectors
- Adviser doesn't commit to law to penalise those who evade taxes
- Finance secretary assures next budget to be more transparent
Finance Adviser Saleh Uddin Ahmed has said the current corporate tax rate is high in Bangladesh, and therefore it will be "revisited" in the upcoming national budget.
Besides, direct taxes will be prioritised in the next budget over indirect taxes to reduce economic inequality, he told the media following a pre-budget meeting with prominent economists at the state guesthouse, Padma, in Dhaka today.
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"Since taking office, I have revoked tax exemptions to various individuals and sectors. To further reduce tax expenditure, such exemptions will be curtailed even more in the upcoming budget," he said.
He added that indirect taxes affect both the rich and the poor equally, so the focus will be on increasing direct tax collection.
At the meeting, Rehman Sobhan, chairman of the Centre for Policy Dialogue, proposed enacting new legislation to hold individuals and businesses accountable if they evade taxes despite having taxable income.
Around 1.2 crore elderly citizens are receiving pensions, though 20 lakh of them are ineligible. The government plans to replace these with 20 lakh new, eligible beneficiaries.
When asked about the potential introduction of such a law in the upcoming budget, the finance adviser said, "I am not committing to this yet as our business community frequently raises concerns and requests various advantages."
Rehman Sobhan also recommended providing greater transparency in how both the government and NGOs spend their funds, particularly in the context of monitoring policies.
He emphasised the need for performance-based budgeting, where each budget should include an evaluation of previous promises and their outcomes, identifying reasons for any unfulfilled commitments.
In response, the finance adviser highlighted two key areas where the upcoming budget would leave a lasting impact: separating the revenue collection and policy-making divisions, and addressing the protracted implementation timelines of projects.
He expressed his hope that the next government would continue the efforts to reform the tax and project implementation systems.
Further, Saleh Uddin indicated that fiscal measures would be introduced to address the persistent issue of project delays, proposing that projects should be completed in the first or second quarter of the financial year, with implementation taking place in the latter half.
He said the focus would be on local projects that generate employment and on enhancing skill development. He noted that automation in factories is leading to foreign hiring, while local workers should be prioritised, especially in sectors like manpower export.
I have proposed imposing a wealth tax on those who own multiple properties, two cars, or have deposits exceeding Tk1 crore, allocating special funds for local gas exploration and prioritising the SME sector.
Regarding social welfare, the adviser revealed that around 1.20 crore elderly citizens are receiving pensions, though 20 lakh of them are ineligible. The government plans to replace these with 20 lakh new, eligible beneficiaries.
He also addressed the allocation of primary education funds, promising better monitoring to ensure proper utilisation.
On inflation control, the finance adviser said economists believe that a combination of monetary policy and buffer stocks for essential goods could help curb rising prices.
He added that the upcoming budget would not be overly ambitious, with an inflation target of 6.5% for FY26, down from 8% in the current fiscal year.
Finance Secretary Md Khairuzzaman Majumdar assured that the upcoming budget would be notably more transparent. He stated that while previous administrations provided limited guidance, the current government has been providing clearer directives, making the process more transparent.
What economists propose
At the meeting, MA Akash, economics professor at Dhaka University, proposed that the government focus on tangible actions in the next budget, given that the current government's term is expected to end before June next year.
He recommended the implementation of a 100-day employment scheme for low-income earners and proposed ration systems for garment workers.
"I have proposed imposing a wealth tax on those who own multiple properties, two cars, or have deposits exceeding Tk1 crore. Additionally, I recommended allocating special funds for local gas exploration and prioritising the SME sector," said Prof Akash.
At the meeting, Dhaka University Professor Abu Yusuf proposed setting up high-quality hospitals in divisional cities, similar to Combined Military Hospitals.
He argued that this would reduce the need for Bangladeshis to seek medical treatment abroad in countries like India and Thailand, while also easing the burden on Dhaka by allowing patients from districts to receive quality care closer to home.
