Extortion has not stop in the market management, when one party leaves, another party inevitably comes in the void, commented Adviser to the interim government on the Ministries of Finance and Commerce Dr. Salehuddin Ahmed.

“Nothing remains vacuum as new elements fill the blank space. New people are filling up the vacuum of those who have already left … it will definitely take some time,” he added.

The Finance Adviser was replying to queries of reporters after UNDP Resident Representative Stefan Liller met him at the finance ministry office at the secretariat today.

“I’ve said time and again to take steps for curbing extortion . . . we’ve never said anything negative in this regard. We’ll definitely take steps,” he said.

Mentioning that the issue of curbing extortion is not only an economic and trade related decision, Dr Salehuddin said, but it has also some political aspects associated with some social values.

Asked about the current inflationary situation as the general point to point inflation rate still hovers around 10.49 percent in August, the Adviser said that the people are starting to get the message as inflation is already on the downtrend.

“It’s not only work through boosting the supply side as some other issues are also related. We didn’t stop the supply side as we’re bringing more commodities like soybean oil and rice bran oil so that there is deficit in the supply side,” he said.

The Adviser went on saying, “Retail prices also matter … My stance is that no added pressure is put on the consumers,” he said, adding that the Directorate of National Consumer Rights Protection (DNCRP) has been enforcing strict market monitoring in this regard.

Dr Salehuddin also suggested for honestly looking into the government’s strict measures for market monitoring as the price of essentials would not come down all on a sudden.

He alleged that there were many reasons for the high inflation trend in the past regime as more money was printed unwisely and it had also an impact on the market. “It will take some certain time to put everything in the right track,”

The general point-to-point inflation rate in July, 2024 was 11.66 percent, according to media reports.

Asked about the meeting outcomes, the Finance Adviser said that apart from continuing their ongoing funded projects, the UNDP has come up with ideas on some new projects.

He said the UNDP has also expressed their interest for providing support in the government’s reform initiatives, in green technology, continuing support in the health and education sector side by side in Bangladesh’s transition to LDC graduation.

Responding to a question, the Finance Adviser said it requires technical assistance for carrying out any sort of reform while the UNDP is likely to provide technical assistance with expertise in this regard.

“They (UNDP) were very much responsive and strongly said that they are committed to help us,” Salehuddin added.

MSH

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."