The Finance Bill 2026 proposal to withdraw income tax exemptions for ethnic minority residents of the Chittagong Hill Tracts (CHT) has drawn opposition from community leaders and activists, who warn it would increase pressure on one of Bangladesh’s poorest regions while generating little additional revenue.
The amendment would remove a tax relief that community representatives say dates back to the Income Tax Act 1922 and has been preserved through subsequent legislation, including the Income Tax Ordinance 1984 and the Income Tax Act 2023.
If approved by Parliament later this month, ethnic minority residents of the three hill districts would come under the regular income tax regime.
The proposal has attracted renewed attention after Rangamati lawmaker Advocate Dipen Dewan publicly called for retaining the exemption.
“I raised the issue in parliament and called for the continuation of the existing tax exemption system for the indigenous people in the Chittagong Hill Tracts,” he told TIMES of Bangladesh.
Dewan argued that withdrawing the exemption would place an additional financial burden on ethnic minority communities in Rangamati, Khagrachhari and Bandarban.
He added that he had previously opposed proposals to impose source taxes on fish supplied from Kaptai Lake and timber transported from the Hill Tracts, both of which were later withdrawn.
Despite his intervention, opposition to the proposed measure has continued to grow.
Rana Jyoti Chakma, Chairman and Founder of Pro Better Life Bangladesh and former chairman of the Department of Computer Science and Engineering at Rangamati Science and Technology University, questioned the rationale for imposing new tax obligations on a relatively small and economically disadvantaged population while large-scale tax evasion remains a national challenge.
Citing Asian Development Bank figures, he said about 67 per cent of families in the Hill Tracts live below the extreme poverty line and another 11 per cent are moderately poor.
He argued that the amendment would add to the burden on vulnerable households while contributing little to overall revenue collection.
Ethnic minority rights activist Dipayon Khisa criticised the proposal for being introduced without consultation with key regional institutions, including the Chittagong Hill Tracts Regional Council, Circle Chiefs, Headmen and other traditional representatives.
“Bringing such a proposal without consultation is contrary to the principles of participation and recognition reflected in the Peace Accord,” he said.
Research also points to persistent economic hardship in the region. A 2017 baseline assessment by the Bangladesh Institute of Development Studies, supported by the International Labour Organization and the Swiss Agency for Development and Cooperation, found employment remains heavily concentrated in agriculture.
According to the study, 46.43 per cent of employed ethnic minority workers were self-employed farmers, 16.46 per cent agricultural day labourers and 12.63 per cent self-employed in non-agricultural activities, while only 3.53 per cent held permanent jobs.
Overall, 66.18 per cent of employed ethnic minority residents were engaged in agriculture and nearly 90 per cent worked in the informal economy.
The study also found that 51.1 per cent of ethnic minority households lived below the poverty line. Advocate Pratim Roy said ethnic minority communities across Bangladesh historically enjoyed income tax exemptions under the Income Tax Act 1922, but the Income Tax Act 2023 limited the benefit to the CHT residents only.
Questioning the fiscal rationale for the latest proposal, Roy said fewer than 1,500 people in the region hold formal jobs, limiting the potential tax base.
“I do not believe the government will be able to collect even Tk500 crore in additional taxes from the CHT under the proposed changes,” he said.
Roy argued that the proposal was unlikely to generate meaningful revenue and risked being viewed as a political rather than fiscal measure.
