The discriminatory taxation policy regarding income from provident funds for a government and private official is unjust and a violation of constitutional principles of equality and fairness.
The recent amendments to the Income Tax Act 2023 have exacerbated this divide by exempting income from provident funds for government employees from taxation while subjecting those of private sector employees to a hefty 15 per cent tax. Such disparate treatment not only undermines the fundamental rights of citizens but also hampers economic growth and social justice.
The imposition of taxes solely on the income from provident funds managed by the private sector while exempting those managed by the public sector creates an unnecessary disparity.
This discriminatory approach goes against our constitution’s principles of equity and fairness.
Taxation should be based on the ability to pay rather than on the employment sector.
All citizens, regardless of their employment status, should be subject to the same tax regulations to ensure equality before the law.
Moreover, the argument for taxing income from provident funds lacks economic justification.
While some argue that taxing long-term financial instruments like provident funds is reasonable, it fails to consider the broader implications.
Taxing such funds discourages savings, particularly among the middle and upper-middle-class citizens who predominantly benefit from these schemes.
Instead of promoting financial security and stability, such taxation policies deter individuals from saving for their retirement, thereby exacerbating future welfare challenges.
Furthermore, international precedents demonstrate that equitable tax treatment of retirement funds is not only feasible but also beneficial for economic growth and social welfare.
Many OECD countries provide tax relief or exemptions for retirement income, recognizing the importance of ensuring financial security for their citizens in old age.
Bangladesh should strive to align its tax policies with global best practices to foster economic development and social cohesion.
The authorities must rectify this discriminatory taxation policy.
The proposed initiative to impose taxes on government employees’ salaries and income from provident funds is a step in the right direction.
However, it must be implemented swiftly and fairly to ensure equal treatment of all citizens under the law.
Upholding principles of equity, fairness, and social justice in taxation is essential for fostering an inclusive and prosperous society.
