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CPD criticises amnesty for black money, warns of inequality and revenue risks

Published : 03 Jun 2025 01:07 PM | Updated : 03 Jun 2025 06:24 PM
CPD criticises amnesty for black money, warns of inequality and revenue risks

The Centre for Policy Dialogue (CPD) on Tuesday strongly criticised a provision in the proposed national budget for FY2025-26 that allows investment of undeclared income, warning that it may widen inequality and discourage compliance among honest taxpayers.

"This will increase inequality," said CPD Executive Director Dr Fahmida Khatun during a press conference held in Dhaka where the think tank presented its analysis of the Tk7.90 lakh crore budget proposal unveiled by the finance adviser on June 2.

The provision allows individuals to legalise undisclosed income by investing in buildings or apartments upon paying a prescribed special tax before assessment.

Although the rate of tax under this provision has been raised significantly compared to previous years, CPD maintained its longstanding opposition to such measures.

CPD has always maintained that such opportunities to legalise undeclared money create disincentives for honest taxpayers, according to the analysis. The efforts of tax authorities should rather be geared to enforcing tax laws and regulations, without exception.

The analysis further notes that at a time when the interim government is working against illegal income, illicit financial outflows, and money laundering, such provisions risk sending the wrong message.

According to CPD, "This is against the July Spirit."

The CPD also commented on proposed tariff reductions in the budget, including the complete withdrawal of import tariffs on 110 products and supplementary tariffs on nine items, as well as reduced duties on a further 507 products.

These changes appear to be linked to Bangladesh's preparation for trade negotiations with the United States.

While CPD acknowledged the need for a strategic approach, it warned that focusing on specific countries, such as the US, under the most favoured nation (MFN) framework of the World Trade Organization could weaken Bangladesh's position in future trade talks.

"If the US is to be given tariff exemption, it will have to be given to other countries as well. Otherwise, it will violate the terms of the WTO. At the same time, the revenue collection of the NBR will also be disrupted," Fahmida said.

She cautioned that if the United States is granted upfront tariff benefits, Bangladesh's ability to negotiate favourable terms in a potential Free Trade Agreement (FTA) may be undermined.

The analysis was prepared by a CPD team led by Executive Director Dr Fahmida Khatun, with contributions from Distinguished Fellow Professor Mustafizur Rahman, Research Director Dr Khondaker Golam Moazzem, and other senior and research fellows of the organisation.