NBR assesses scope to revive property tax

The National Board of Revenue weighs the possibility of reintroducing property taxes to ensure a more equitable distribution of wealth and reduce economic disparity, a senior official of NBR said yesterday.

The move comes after Finance Minister AMA Muhith asked the tax administration to see whether the wealth tax could be resumed, instead of a surcharge on wealth.

The NBR withdrew the wealth tax in 1999; it imposed a surcharge on wealth worth over Tk 2 crore in fiscal 2011-12.

"We are working on it. It requires detailed scrutiny because it is a major decision," said a tax official seeking anonymity. The matter would be discussed in detail prior to framing the budget for the next fiscal year.

The NBR official was however less optimistic about the outcome if the wealth tax is imposed. "Litigations related to the valuation of wealth are a problem," he said, adding that India abolished the measure, particularly for this reason. Early this year, the neighbouring country stopped the wealth tax and levied an extra 2 percent surcharge on the super rich, according to reports in Indian media.

The NBR collector logged Tk 208 crore in surcharge on wealth in fiscal 2013-14 from 10,152 individuals who have a net wealth of more than Tk 2 crore. The collection was Tk 101 crore in the previous year, according to NBR.

But taxmen and analysts said the number of the wealthy people will rise if the government calculates the value of lands and apartments on the basis of present market prices.

The number of wealthy people and their wealth will should be higher from the viewpoint of property price spirals and a rise in the number of apartments and expensive cars, they said.

"The number is very low even for Dhaka city, let alone the entire country. It is likely that there are more than 10,000 apartment owners in the plush areas of the capital," Towfiqul Islam Khan, a research fellow at Centre for Policy Dialogue, told The Daily Star early this month.

"Land and apartments are undervalued in Bangladesh," he said, adding that people in the high-income segment also misrepresent the value of their property on paper.