The scope of whitening black money will not bring much benefits to the country’s economy as black money holders will only take advantage of this facility for the time being, experts have said.
Rather it will help black money holders whiten their black money with payment of minimum tax, they added.
After a one-year hiatus, the authorities concerned are likely to provide opportunity for black money holders to legalise their illicit money with payment of 15 percent tax. Earlier, the National Board of Revenue (NBR) allowed them to make black money white in the fiscal year 2020-21.
According to economists, the opportunity to whiten black money with less tax will have a negative impact on the revenue system. They also suggest taking action against black money holders.
Zahid Hussain, former lead economist at the World Bank Dhaka office said, “From our previous experience, we have seen that successive governments have given chance to whiten black money. But the vision behind this move was not reflected. It was expected that investment would go up, the share market would rebound, and revenue collection would increase, but nothing happened.”
“Due to this, honest taxpayers will take the chance as they can save half of their tax which is likely to deepen the crisis. After all, it’s not a good idea,” said Zahid Hussain who is now in Boston, USA.
Senior Research Fellow at Centre for Policy Dialogue (CPD) Towfiqul Islam Khan told Bangladesh Post, “We do not support such an initiative which may discourage our honest taxpayers from paying tax. At the same time, getting a chance of paying low tax motivates illegal wealth owners to earn more money through illegal means.” “For over two decades, we have observed that such opportunities to legalise black money have not brought any substantial benefits to the economy. Instead of offering these chances, I believe the government should focus on prosecuting those, who acquire illegal wealth, to ensure full tax collection,” he added.
He further said, “I think the first thing that needs to be addressed by the government now is to take institutional measures to unmask illegal wealth owners.”
In a bid to tackle the ongoing economic crisis, the revenue board is likely to allow black money holders to legalise their illicit wealth by paying 15 percent tax. Two years back, they made a similar decision, but during that time, illegal wealth owners got the chance to legalise their black money by paying 10 percent tax only.
During the fiscal year 2020-21 when the NBR allowed legalisation of illegal assets at 10 percent tax rate to mitigate the economic turbulence caused by the Covid-19 pandemic, 11,859 individuals whitened black money of Tk 20,000 crore and paid about Tk 2,000 crore as tax.
Sources at the National Board of Revenue said that the opportunity to legalise illegal wealth is likely to continue for next one year following its announcement in the upcoming national budget on June 6.
Former president of Dhaka Chamber of Commerce and Industries (DCCI) Rizwan Rahman said, “If we earn legally, we have to pay 30 percent tax. But legalising black money, illicit wealth owners have to pay 15 percent tax. No one will find such an opportunity anywhere in the world. This can be found only in Bangladesh. It is not good for the country’s economy.”
In the budget for the fiscal year 2022-23, the government decided to allow repatriation of funds that were laundered abroad, subject to payment of 7 percent tax. Surprisingly, money launderers showed no interest. According to the NBR data, about Tk 330 billion has been legalised during the period between 2009 and 2023.
