Not enough growth of wealth tax

That the growth of wealth tax is not commensurate with the rise in the number of the super rich or the rich was subject of speculation. But now a report carried on wealth tax collected mainly from the highest income segment of society confirms that collection of wealth tax has substantially slowed down in the fiscal year (FY) 2017-18. An analysis of the latest data received from the National Board of Revenue (NBR) reveals that against the growth of 28.45 per cent in the FY 2016-17, the wealth tax registered a growth rate of only 15.10 per cent in the FY 2017-18. There is no reason to think that accumulation of wealth by the super rich has suddenly come to a standstill or declined. To go by the World Ultra Wealth Report, 2018, Bangladesh still has to its credit the record of the fastest growth of this class of moneyed people. In fact, the country has been at the forefront of adding to the select group at the rate of 17.3 per cent since 2012.

Now who belong to the ultra-high net-worth (UHNW) category? These are the people who have at their disposal assets worth at least $30 million or about Tk 250 crore for investment, of course excluding personal assets and property such as 'primary residences, collectibles and consumer durables'. The World Ultra Wealth Report of 2018 covered at least information and data available until 2017. So nothing extraordinary has happened by this time to cause a drastic squeeze on the growth of the ultra-wealthy people in this land. Clearly, the taxes collected from wealthy people as a surcharge depending on their wealth accumulation should by no means register a decline. Here is clear indication that the wealthy people somehow or the other evaded the NBR net and paid less tax than they were supposed to.

Then there are some inherent weaknesses in the legal parameter of the NBR. For example, someone purchasing an apartment is subject to wealth surcharge but another wealthier person owning landed property hundred times pricier in the current market value but bought long ago is not required to pay the wealth tax. This is the height of discrepancy in the tax return. What is more, the wealthier people can thus avoid paying wealth surcharge. If such property is brought under the tax net, the revenue will surely go up.

In a country of about 160 million, so far there are only 1.6 million (approximately) taxpayers. This is unacceptable by any reckoning. The tax base should expand further. With simplification of tax-return procedures and on-line submission, the number of taxpayers has increased from 9,00,000 in 2011 to 1.6 million in 2018. But there are more taxable people outside of the tax net. So revenue can grow further if the tax outreach among the wealthy can be expanded and also the many prospective ones can be brought under the tax regime. If the ultra-wealthy tend to skirt payment of wealth surcharge, social discrimination may yawn further. At any rate, the reasons for lower collection of wealth tax need to be addressed.