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As Bangladesh approaches its next budget in early June, a once-taboo question is edging into the mainstream: should the taxman look beyond income and begin taxing wealth more directly?

For years the country’s fiscal debate has revolved around familiar themes which include raising revenue, widening the tax net and squeezing a little more from salaried workers who are easiest to monitor. 

Bangladesh’s difficulty is well known. Its tax-to-GDP ratio has hovered near 7% in recent years – among the lowest in Asia. OECD data put the figure at 7.2% in 2023, far below the Asia-Pacific average of 19.5%. 

In practical terms, that means the state raises far less, relative to the size of the economy, than most of its peers. Bangladesh’s total tax take is roughly $35-40 billion annually, depending on exchange rates and final collections.

Yet a deeper problem has become harder to ignore. Wealth, especially urban property and inherited assets, has accumulated far faster than the state’s ability to tax it.

If any government here is serious about progressive taxation, they may soon have to confront those who own the most…not merely those who earn the most.

The logic is pretty straightforward. Progressive tax systems were built on the principle that citizens with greater means should contribute more. Traditionally that has meant graduated income-tax bands.

But in many countries income is no longer the clearest measure of privilege. A retired landlord with modest declared earnings may own several flats. A family company may generate little taxable salary while controlling substantial assets.

Children of affluent households can begin adult life with apartments, land and financial wealth that others will spend decades trying to acquire.

Taxing wages while sparing accumulated wealth is not progressive; it is selective.

That is why inheritance tax, sometimes derided as a “death tax,” has reappeared in policy circles.........

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