Govt staff to pay more taxes

The government employees are set to pay more tax as their salaries increase under the new pay scale, due to take effect from the next fiscal year.

At present, the government staff pays tax on their basic salary but their other allowances are tax-free, which Finance Minister AMA Muhtih deem to be discriminatory.

“As the first step to remove such discrimination, I propose similar tax treatment on basic salary, bonus and festival allowance for both government and non-government salaried employees,” he said in his budget speech yesterday.

To accommodate the new pay scale, which will be implemented in phases, Tk 45,153 crore has been set aside in the upcoming budget for the government staff's basic salary and allowance, up almost 54 percent year-on-year.

Besides, the government intends to set up a new bank for the welfare of the government staff titled Shammridi Shopan Bank, as recommended by the Pay and Services Commission led by former Bangladesh Bank Governor Mohammed Farashuddin.

The bank is expected to commence operation with a paid-up capital of Tk 400 crore, collected by selling primary shares to existing and retired employees, according to the finance minister. A separate authority -- the Pension Fund Management Authority -- to manage the government employees' pension will be set up.

At present, more than 5 lakh retired government employees are enjoying pension benefits.

There is no designated fund or authority to administer pension-related activities of this huge a number of pensioners, which may create imbalance in public expenditure management in future, Muhith said.