The Centre for Policy Dialogue (CPD) has proposed imposing inheritance tax in order to reduce wealth inequality, as well as increase revenue collection.
The think tank believes that with proper implementation, the tax has the potential to generate an additional revenue of Tk6,000 crore.
“Proper collection of property tax, holding tax and inheritance tax will create opportunities to reduce wealth inequality,” Dr Debapriya Bhattacharya, distinguished fellow of CPD, said while presenting the keynote paper in a dialogue titled “State and scope of property taxation in Bangladesh” at a city hotel on Wednesday (24 May).
Inheritance tax, a form of wealth tax, is levied on property and money acquired by gift or inheritance.
Debapriya emphasised that the growing wealth and income inequality within the country highlights the need to enhance tax fairness by increasing tax collection.
“Given the concentration of wealth, the rising income disparity, and the increasing wealth inequality within the country, there is a pressing need to establish fairness in revenue collection and taxation. Consequently, the introduction of a wealth tax has become imperative,” he added.
Highlighting the importance of efficiency and fairness, he said the implementation of a wealth tax should be based on strategic planning within the existing framework of the National Board of Revenue (NBR) and land management. He stressed the importance of establishing inter-connectivity and intra-connectivity among various government institutions, ensuring accurate asset valuation, and enhancing tax collection mechanisms.
“These measures aim to facilitate the effective implementation of property tax and inheritance tax for proper taxation,” Debapriya added.
Currently, there is no specific tax referred to as a “wealth tax” in the country. However, there are six types of taxes and duties that can be roughly categorised as wealth-related. These include the land development tax, holding tax, capital gains tax, stamp duty, wealth surcharge, and, to a lesser extent, the gift tax, although its effectiveness is limited.
Also, there is no specific tax imposed on the gifting of wealth from relatives, nor is there any form of inheritance tax in place.
Addressing the event, Dr Ahsan H Mansur, executive director at the Policy Research Institute (PRI), said, “Automatically inheriting wealth [inheritance] without paying any kind of tax increases wealth inequality. It should come with taxes.”
He advocated for the implementation of taxes on inheritances to address this issue.
