• Sunday, Sep 26, 2021
  • Last Update : 10:13 am

A bad duty

  • Published at 05:27 pm June 22nd, 2017
  • Last updated at 06:48 pm June 22nd, 2017
A bad duty

The finance minister has done a good thing by resolving to revise his proposal for an increase in excise duties on bank accounts.

The proposed increase would have hit hard the lower to middle class families in the country.

In spite of what the finance minister previously said, the truth is, a bank balance of Tk1 lakh does not make a person rich in Bangladesh today.

For many people, it just means they are getting by and trying to make provisions for the future: Children’s educational expenses, emergencies, and rainy day funds.

We do not even have adequate social safety nets in Bangladesh, so if a family falls into hard times, their accumulated savings is usually their only lifeline.

There are several arguments against a tax increase. On the one hand, a tax on bank accounts, which is essentially a tax on savings, can be bad for long-term growth.

Savings are necessary for capital formation and capital formation is necessary for long-term growth. A lack of savings means lower investment, which, as a growing economy, we need a lot of.

Secondly, the proposed tax is ultimately regressive.

The increase would raise the existing amount of tax by a flat 60%-62.5%, meaning the tax rate will continue to be regressive.

Finally, with a high duty on bank balances, people may be encouraged to find alternative means of conducting transactions outside the financial system, and that is definitely not what we want.

We should be striving toward the financial inclusion of all people, including low and middle income groups -- rethinking the excise duty is the right move.

50
Facebook 50
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail