Proposed tax on savings certificates may go

The government might retract its decision to double tax on savings certificates as the move is likely to draw massive criticism from the people.

Four types of savings certificates are currently sold and the rates of yield are up to 11.76 per cent. Currently, around 20 million investors are involved in this sector, reports UNB.

Currently, the tax is five per cent.

Finance Minister AHM Mustafa Kamal recommended increasing the tax to 10 per cent in his proposed budget for 2019-20 fiscal.

According to finance ministry and the National Board of Revenue (NBR) sources, the government is currently considering two options.

One is to cut the proposed tax on all types of savings certificates. The other is to cut proposed tax on family savings certificates and pensioner savings certificates.

Only women can purchase family savings certificates while the pensioner savings certificates are for retired persons.

The final decision will come from the Prime Minister, the sources said.

The proposal to hike tax drew criticism from various quarters and many pointed out that it will directly affect the middle class, pensioners and small savers.

"I don't understand why he [finance minister] increased the tax at source on family savings certificates from 5 per cent to 10 per cent," former agriculture minister Matia Chowdhury said, taking part in the budget discussion in Parliament.

The ruling party lawmakers noted that many women in rural areas depend on the earnings from savings certificates and urged the government to reconsider its decision.

She mentioned that the proposal came at a time when the government is providing various facilities to businessmen, increasing salaries and benefits of its employees and teachers and also giving various facilities to different sectors.

Matia demanded that Mustafa Kamal withdraw his proposal and sought the prime minister's special attention towards this matter.

Meanwhile, the government continues to taking big loans from savings certificates.

In 2014-15 fiscal, the target was to take Tk 90.00 billion from the sector, but in the end the government took Tk 287.05 billion. The trend continued in other fiscals.

In the first ten months of the current fiscal (July 2018-April 2019), the government took Tk 434.74 billion from savings certificates. The target of the government's net borrowing from savings instruments is Tk 261.97 billion for the fiscal year.