Economists and income tax specialists binned the proposal of foreign minister over making income tax return submission mandatory for all National Identification (NID) card bearers.
Terming the proposal 'illogical' and 'unrealistic', they quoted laws and said that those, who have income over Tk 300,000 yearly, have to pay tax. Why will the people pay tax with income less than that?
If the government brings all NID holders under the tax net, the numbers of registered taxpayers will jump by 80 to 100 million all of a sudden. The existing administration doesn’t have the capacity to deal with the bulk number of taxpayers’ data, they added.
In his speech in parliament on the proposed budget for fiscal 2022-23, the foreign minister Abdul Momen on Wednesday proposed to make the tax return submission mandatory for all NID card holders. He, however, didn’t explain how this number of people will be brought under tax net.
At present, nearly 120 million people hold NID cards in the country. If the foreign minister's proposal takes effect, they all have to collect Tax Identification Number (TIN) from National Board of Revenue (NBR). Then all have to submit tax return at the end of the year.
Aminur Rahman, a former member of income tax department at NBR, said the foreign minister’s proposal is unrealistic. No country across the world has the practice of completing income tax registration using the national identity cards. No country has a provision for submitting income tax returns by all NID card holders. It is in no way a realistic proposal, he said.
The former NBR official also noted that it is quite impossible for any country to bring all NID card holders under the income tax net.
According to the income tax ordinance, the tax is mandatory only when one’s income crosses the threshold of Tk 300,000. When one’s income does not reach the minimum mark, why will he or she collect tax identification number (TIN).
All the citizens, including rickshaw pullers, day laborers, domestic helps, and rootless people, now have NID cards. If the proposal is accepted, these extremely poor people have to submit returns every year.
Besides, it is quite impractical to think that these people would go to their nearest tax zones, fill up forms appropriately, and submit income tax returns following rules and regulations.
Just imagine that these poor and helpless people lined up at a place to submit their income tax returns, it is completely unrealistic, he added.
Ahsan H Mansur, the executive director of Policy Research Institute (PRI), said the foreign minister’s proposal is irrational. The number of TIN-holders would suddenly jump by 80 to 100 million. The authorities are now struggling to manage around 7.5 million taxpayers, then what would happen if the proposal is accepted?
The whole tax system would collapse, he added.
The foreign minister is thinking of bringing 120 million people under tax net.
Meanwhile, in his budget speech, the finance minister AHM Mustafa Kamal said, there are nearly 40 million people in the country who belong to middle class or above. Despite having the capability, most of these people don’t pay the tax.
The finance minister wants to bring those people under tax net. The idea of the finance minister is ambitious but possible. Several years ago a former NBR chairman had said there are almost 10 million people in the country, who are eligible to pay tax.
At present, there are 7.6 million TIN holders across the country. Though it is compulsory for them to file tax return, many of them don't comply with. Including all, 2.6 million people have filed their tax returns in the outgoing fiscal year.
However, the foreign minister has proposed to make it compulsory for every citizen of the country, aged above 18 years to submit their tax return, even if they don't have a taxable income.
It is near impossible for the current manpower and structure of the NBR to provide TIN to these 120 million people and ensure its proper management.
Apart from that, there has been no reform in the Income Tax Department of NBR in the last few years. Tax offices have not been set in every upazila yet. Nonetheless, people living in remote rural areas also have NIDs now.