Provision to whiten black money in the upcoming budget
As the time to announce national budget for the fiscal year 2019-20 keeps knocking at the door, the budgetary provision for allowing undisclosed income or black money for investment purposes comes under the spotlight. Black money worth, as much as, Tk 13,372 crore had been whitened (legalised) since the country's independence up till June 2017 and more money are likely to follow suit.
The government is once again mulling over to include an amnesty provision, allowing the opportunity for whitening black money through investment in industries to boost private investment. In the outgoing fiscal, people could whiten black money by paying an additional 10 per cent tax along with the normal tax availing the provision of avoidance of questioning the source of money by the tax department -- if the tax payers declare to invest money in industries and other productive sectors.
Previously this opportunity was given by BNP govt way back in 2003. But it was withdrawn after two years because of protests and other reasons. The last military backed caretaker govt reintroduced the policy. And the current government is once more about to place it back in a bid to heighten the private investment -- jumping between 22 and 23.40 per cent of the GDP in the last few years.
The wider range of black money making has a long list beginning from smuggling, under-invoicing, over-invoicing, contractual cuts and commissions, tender monopolization, graft extortion, rent seeking, loan defaults to many other dubious mechanisms. However, the dodgy circle of tax evasion yields the cancerous growth of black money.
Following a nosedive in direct foreign investment, domestic debt creeping up and revenue earning showing no significant improvement, there is no way out but to increase internal resources to formulate a development oriented budget and accelerate economic growth by whitening black money.
There are some ways such as, encouraging voluntary compliance, tax audit, efficient internal audit, cooperation of banks, tax payers benevolent schemes etc that can reduce the black money. Taxpayers usually require help from lawyers and accountants to avoid taxation. Government can also consider instructing professional and other legal bodies to strictly follow their rule books to stop assisting taxpayers to evade and avoid the accurate amount of tax money.
Tackling the menace of black money requires stringent and newer techniques and schemes buttressed by a long-term strategy. Unplanned and stopgap measures will not deliver desired outcome. Our upcoming budget can do little in this regard, but the time hasn't run out to initiate a long-term strategy. Lastly, the need of the minute: Given what has happened in the past, identify and stop all loopholes to make black money in Bangladesh.