The finance minister has made a somersault, once again, on the issue of black money. He has, as in the past, reneged on his promise and kept the provision of whitening black money in the national budget.
"You can be rest assured that the facility (black money whitening) is gone from today", Finance Minister AMA Muhith told newsmen at the post-budget press conference held on June 06 last.
Three weeks on, on June 28, while placing the Finance Bill-2014 for adoption in the Jatiya Sangsad, he kept open the facility of investment of tainted money in real estate sector without any question being asked.
Mr. Muhith did not explain what had prompted him to backtrack on his previous position.
He possibly knows it for sure that the criticism that his move would evoke would die down within a very short time and things would be normal again as it happens in the case of other important national issues in Bangladesh.
The criticism about the opportunity offered to whiten black or undisclosed money usually comes from the enlightened section of the population and the common people bother least about it or its implications. So, except for creating some ripples in the media the issue does not carry any appeal among the mass people. But that does not anyway lessen the extent of negative impact such a facility creates on the economy and the honest taxpayers.
It seems pertinent to raise a question: Why do the governments across the political divide risk their reputation by offering the holders of black money the opportunity to whiten their wealth when response to the same has been poor?
Between the fiscal 1971-72 and the fiscal 2012-13, about Tk. 138.08 billion was whitened and the National Board of Revenue (NBR) received taxes worth Tk. 14.55 billion which is less than 1.0 per cent of the tax revenue target set for the new fiscal beginning from today (Tuesday). Is the amount of tax revenue worth the criticism that the governments have been digesting for decades?
It is quite clear that the finance minister did include the money-whitening provision in the Finance Bill-2014 rather unwillingly. Understandably, he had to succumb to pressures coming from very powerful quarters.
Those who built up the pressure are obviously the players of the underground economy the size of which remains a matter of wild guess. Some say it is equivalent to 45 per cent of the formal economy while others disagree. The latter claim it to be equivalent to about 80 per cent of the legal economy. It could be in between the two. But the fact remains that the size of black or underground economy of Bangladesh is very large. Such a large underground economy emerges when regulations are lax and the rule of law is weak, which again creates a perfect environment for corruption to breed.
In Bangladesh, the factors of underground economy are many in numbers. Bribery, smuggling, under- and over-invoicing in external trade, contractual cuts and commission, grabbing of tenders through muscle-flexing, extortion, collection of unauthorised tolls, rent-seeking, bank loan defaults, land grabbing, drug dealing etc., are among the factors that are responsible for the growth of the black economy. Many tend to believe that these factors, instead of diminishing gradually over the years, have got an environment otherwise conducive to thriving further.
How is the tainted money kept by its holders? That is not a problem at all in Bangladesh. Some people exhibit openly the power of the ill-gotten money. They lead a posh life and nobody bothers to raise any question about that. Black money, side by side its white counterpart, is kept in banks or invested in stocks, savings instruments and real estate or used in questionable activities that generate more of its kind. Some others transfer the unaccounted for money abroad and the act of transfer hardly involves any risk.
However, a lot of noise is being created of late over the transfer of ill-gotten wealth abroad following a few reports prepared by a number of international organisations. Policymakers are vowing to bring back the illegal wealth deposited in foreign banks. But many tend to treat the policymakers' promise more as rhetoric dished out for public consumption than a hard decision.
What has been said above was about the wealth earned through illegal means. But there are some other ways that help a section of people to generate, what is described, legally earned undisclosed income. The main reason for being described so is the non-payment of tax against such income.
The finance minister has kept the money-whitening provision in the budget for 'legally earned undisclosed' money, not 'illegal' wealth. But who would look into the colour of the money invested in real estate when the budgetary provision makes it clear that no question would be asked about the fund invested?
The critics may keep themselves busy with the debate over the issue of black money for some more time. But it is unlikely that any substantial amount of tainted money would be legalised using the facility offered by the government. The offer runs counter to the government's avowed policy of transparent and fair fiscal management and encourages shadow economic activities. This is an issue that the finance minister can hardly ignore.
zahidmar10@gmail.com
Risking reputation on tainted money
Shamsul Huq Zahid | Published: July 01, 2014 00:00:00 | Updated: November 30, 2024 06:01:00
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