MD ASADUZ ZAMAN

The government is set to backtrack from its plans to reintroduce a wealth tax and impose a first-ever advance income tax (AIT) on motorcycles and battery-run auto-rickshaws in the upcoming budget for fiscal year 2026-27, according to officials familiar with the matter.

The development follows Prime Minister Tarique Rahman’s directives to scrap the proposed levies, they said.

The planned AIT sparked public backlash and street demonstrations by motorcycle owners and ride-share drivers. Such pressure might have contributed to the reversal, finance ministry officials said. On the wealth tax, officials did not disclose specific reasons for the decision but hinted that political considerations may have played a role.

“We worked extensively on the wealth tax and developed what we believe was one of the most comprehensive proposals aligned with global standards. However, the government did not accept it,” said a senior official of the ministry, requesting anonymity.

The proposed wealth tax had been designed to be calculated on net wealth declared in tax returns, given the difficulties in assessing market values of assets. The National Board of Revenue had also planned to gradually build a system for valuing assets at market prices.

Under the proposal, net wealth up to Tk 4 crore would have been exempt, in line with the existing wealth surcharge threshold. Wealth between Tk 4 crore and Tk 6 crore would have been taxed at 0.25 percent, followed by 0.50 percent on the next Tk 5 crore, 0.75 percent on the subsequent Tk 5 crore, and 1 percent on wealth exceeding Tk 16 crore.

Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), said Bangladesh already has a wealth surcharge in place, but a separate wealth tax could still be justified if its slab structure is carefully designed.

“The government may be taking additional time to study the proposal, particularly its impact on the overall tax burden,” he said.