A few days ago, one of my friends who resides and works in the UK shared that during COVID-19, the Government of the UK made several direct fund transfers to his account to cope with the crisis. I got a ready response that such measures are not uncommon in Bangladesh. Despite being a least developed country, the Government of Bangladesh provided cash assistance to day laborers and informal sector workers during COVID-19.
I lost my job in April 2025 due to the USAID fund cut globally impacting the entire development sector. With the cancellation of USAID funds, organizations have been forced to downsize, scale back operations, or shut down entirely. Though I was not funded by any USAID sources but rather a core Senior Management Team member in a reputed INGO in Bangladesh, my role was declared redundant due to the funding crisis. Just like me, this sudden joblessness pushed thousands of development workers and their families into deep insecurities who were affected directly or indirectly. They are struggling to pay for their house rent, tuition fees for their children, and even basic household expenditures, including food and medication.
A major portion of these jobless people were taxpayers. Their taxes were already deducted from sources, assuming their income would remain unchanged throughout this financial year. Section 6 of Income Tax Law-2023 has several provisions for tax exemption, reduction, and holidays. However, many taxpayers like me might not know the legal provision for tax exemption, reduction, or holidays. We are not experts on any such facility that is already allowed per the Income Tax Law 2023. The most unfortunate concern is that those who lost their jobs due to the USAID fund cuts have not received any official communication or clarification from the government of Bangladesh regarding tax exemption, reduction, and holidays.We are calling the government to arrange consultations with us and to assess the current situation we are going through.
During COVID-19, different countries provided tax exemptions or relief to the unemployed, helping ease the financial burden in times of joblessness. These measures not only provided immediate relief to the affected individuals but also stimulated the economy by maintaining consumer spending. Asian Countries such as Japan provided tax deferral opportunities, Australia expanded unemployment benefits through Job Seeker and direct payments to affected individuals, Thailand introduced various economic relief packages, including tax exemptions for specific sectors and a one-time cash handout for individuals who lost income during the pandemic.
In France, unemployment benefits (called Allocation d'Aide au Retour à l'Emploi or ARE) are typically exempt from income tax during the first 12 months of unemployment, with taxes starting only after that period. While it is not unique for the Western and Asian governments to announce any or all of these measures for a certain period of joblessness due to a special circumstance such as COVID-19. Why not Bangladesh?
The highly skilled, high taxpaying development sector workers impacted by USAID fund cuts have not yet received any official statement with empathy from the Government of Bangladesh. This lack of empathy from the government is disheartening. There is not even any specific number or any surveys conducted on them. People in the sector estimate the number to be 30,000-40,000 as reported by a popular daily in Bangladesh on 05 March, 2025.USAID projects were under a 90-day review period, which ended on March 31.
A major number of people like me received their termination after that review period, and naturally, they are not included in this estimated number. I urge the government to conduct an extensive survey on the people who lost their jobs due to the USAID fund cut and assess their job losses' economic impact. We have consistently paid personal taxes throughout our careers, contributing to the nation's development.
However, our current unemployment has led to a direct reduction in income tax revenue. Moreover, we are uncertain about the full scope of this revenue loss, which highlights the need for the government to conduct an economic impact assessment. With household incomes shrinking, we have been forced to cut back on personal consumption to the bare essentials. This decrease in consumption will likely affect industries like retail, hospitality, and transportation, which will reduce VAT and other consumption-based taxes, further diminishing the government's overall revenue.
Therefore, we strongly call on the government to carry out an economic impact assessment. We are also inviting the government to establish a course correction/Gazette notification based on the income tax law 2023 to adjust a demand for the refund of the advance income tax to allow us some relief. We urge the government to survey the currently unemployed workforce due to USAID fund cuts. Prolonged invisibility from the government could diminish our motivation to survive today to see a better future tomorrow.
The writer is a Development Professional and Commonwealth Scholar from Bangladesh
