Dhaka, June 14 -- Bangladesh's increasing income inequality is largely driven by a tax structure heavily reliant on indirect taxes, according to the latest fiscal analysis released by the Ministry of Finance.
The Medium-Term Macroeconomic Policy Statement (MTMPS) for FY26 calls for urgent reforms aimed at boosting the share of direct taxes in the nation's revenue portfolio.
The report reveals that in FY24, indirect taxes-mainly value-added tax (VATz) and supplementary duties (SD)-accounted for 3.86 percent of GDP, while income taxes contributed only 2.26 percent. Since VAT and SD are levied on consumers regardless of their income levels, these taxes disproportionately affect lower-income groups, exacerbating wealth disparities.
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