Officials from the ministry of finance have indicated that the government intends to raise the tax-free income from the current Tk 250,000 annually to Tk 270,000. That is a marginal increase and falls far short of what the various chambers of commerce have been advocating. Given today's rate of inflation, the average real wage of citizens have been eroding steadily over the past few years. The runaway increase in prices of house rent, healthcare, education and transportation costs have put a real squeeze on middle class incomes and these realities should be looked into when the new income taxation regime is revised in the coming fiscal.

People could also get some relief if the personal income tax slabs are widened. According to a local think tank, the first taxable slab can be increased from 7.5 percent to 10 percent. This would give some additional relief for the average tax payer belonging to fixed income or limited income groups. The tax-free income should be raised to at least Tk 350,000 annually so that service holders can get the benefits with increased purchasing power.

It would be more prudent for the NBR to expand its tax net to bring business people in rural areas under the income tax bracket as a means to expanding the tax net. Presently, it is only the urban populace that the authorities concentrate on and this has to change if some relief is to be given to fixed income groups who are being squeezed due to inflationary pressure.