Dual taxation policy still in force

Even though all the citizens of the country are supposed to have equal rights under the constitution yet there is discrimination between government officials and private sector employees when it comes to pay income tax. Individuals involved in the management of the state, judges of the judiciary or government officials get various exemptions in paying income tax while private employees have no such benefits. Practically two laws are still in force in one country.

According to the Income Tax Act, government employees have to pay tax on their basic salary and festive allowance. However, facilities other than basic salary during employment or retirement benefits are kept outside the ambit of income tax.

Prime Minister, Speaker, Ministers, Deputy Speakers and MPs who are in charge of the administration of the state usually takes advantage of this. They pay income tax only on basic salary or remuneration  while all other income is tax free. Judiciary also enjoys the same benefits. The Chief Justice of Bangladesh, judges of the Appellate Division of the Supreme Court and the High Court Division are also exempt from tax on all income except basic salary.

Analysts consider the application of two types of laws in one country to be inconsistent with the principles of the constitution, discriminatory, contrary to justice and politically motivated. They said that although the previous government took various unfair decisions, now is the right time to abolish these discriminatory laws.

As per the Income Tax Act 2023, interest/profit received from pensions of government officials, endowments, recognized provident funds, superannuation funds, any amount received on voluntary retirement, pensioners savings certificates are exempt from income tax. They have to pay tax only on the money they get for basic salary and festival allowance.

Apart from this, the income tax department of NBR has issued SROs to the Prime Minister, Speaker, Deputy Speaker, Ministers, State Ministers, Deputy Ministers and Advisors of the ministerial rank and members of Parliament and exempted them from income tax for festival allowance, all money allowance and other benefits received without the basic salary.

Another SRO has provided similar facilities to the Chief Justice, Appellate Division of the Supreme Court and Judges of the High Court Division.

However, any income earned by private employees is kept within the ambit of income tax. Private employees think that this is not morally acceptable. They think that ministers and MPs perform their duties as public servants. Widespread tax exemptions for them and government officials are morally unacceptable. They are also citizens of this country. Their tendency to take these unethical benefits is discriminatory and creates a negative perception among taxpayers.

The constitution of the country says, “All citizens are equal before the law”. Therefore, if the law is effective, it should be for everyone and if it is interrupted, it is a clear discrimination, says Barrister Jyotirmoy Barua, a lawyer of the Supreme Court of Bangladesh.

He said, “Article 27 of the country’s constitution clearly states that ‘all citizens are equal before the law’. That is, when the law becomes effective, it will be equally effective for everyone. The previous government introduced the system of separate benefits for political purposes. I think it is the right time to take initiative to cancel these. The current interim government has no such responsibility. The proposal to abolish them is very reasonable and such discriminatory processes should not exist.”

This lawyer feels that judges should be more transparent about this instead of taking special advantage. He said, “Why do judges enjoy such special privileges in the judicial place? Rather, they have a greater responsibility to pay taxes and be more transparent in these matters.

Executive director of the Center for Policy Dialogue (CPD) Dr. Fahmida Khatun and former member of NBR (Corner Policy) Dr. Syed Aminul Karim expressed similar opinions.

Dr. Fahmida Khatun said, ‘Tax should be paid by everyone and should be the same for everyone. Any expenses of the government including salaries and allowances are paid by the people. It is not fair to take income tax concessions on salaries and allowances from people’s money.

Dr. Syed Aminul Karim said, “There cannot be two laws in one country. It’s discriminatory and it’s time to fix it. These inconsistencies must be removed. No doubt, it is discrimination and such discrimination cannot exist. Private employees have a tax on provident fund, but government employees do not. It can’t be either. As both are citizens of the state, it cannot be.’

Meanwhile, MPs can import cars from abroad without paying taxes. However, a general citizen of the country has to pay duty ranging from 89 to 850 percent if he/she wants to buy the same car under CC. Accordingly, if the price of a car is 1 lakh taka, then at least 89 thousand taka more has to be paid as tax for its import. And if the maximum rate is taken, the tax is 8 lakh 50 thousand taka. However, there is no cost for MPs to pay dues.

On the advice of the International Monetary Fund, the NBR proposed imposing 25 percent customs duty and 15 percent VAT on MPs’ car imports in the budget for the current fiscal year, but it didn’t happen so. According to NBR sources, from 2017 to 2023, MPs imported 316 vehicles under duty-free facilities. The price of these cars is 260 crore taka. If the maximum 850 percent duty is calculated, the government has lost 2 thousand 210 crore taka in revenue.