Keep money whitening scope on productive sectors
Businesspeople have urged the federal government never to allow any blanket dark money whitening option, saying the preferential tax treatment ought to be extended to the sectors that create jobs and also have a positive effect on the economy.
They argue that job creation for a massive number of people is necessary, particularly through the coronavirus pandemic, as the crisis-induced economic slowdown has rendered many jobless.
"The government makes it possible for dark-colored money whitening in industries that generate employment opportunities," said Faruque Hassan, president of the Bangladesh Garment Makers and Exporters Association.
"However, it could not be smart to allow a good blanket whitening scope in every sectors, particularly those industries that induce fewer jobs prospects and have little impact on the society."
The amount of money whitening scope is unfair to honest taxpayers as it creates uneven competition and demoralises businesses, said Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industry.
"When the government is trying to expand the tax net, it will encourage many never to pay tax properly. We have to introduce an insurance plan to inspire persons to pay taxes rather than to allow funds to become black. It isn't prudent to facilitate tax-dodgers."
He said the federal government could permit the black funds to be committed to the monetary zones. "However, it must be for a restricted period." While unveiling the budget last June, Finance Minister AHM Mustafa Kamal introduced the provision that no authorities, including the National Table of Income and the Anti-Corruption Commission, can boost questions on the resources of the untaxed money.
Specific taxpayers can whiten undisclosed cash, bank deposits, financial savings certificates, shares, bonds or other securities by paying 10 % tax as a penalty, way lower than the 25 % regular tax rate.
Over the last many years, the federal government has allowed untaxed money-holders to invest in areas such as property. Taxpayers can legalise any undisclosed real estate, including land, buildings and flats, by having to pay tax per square metre.
Therefore, untaxed money-holders rushed to the sector, sending the prices of extravagance flats in Dhaka to soar. Actually, the land and flat in Dhaka happen to be as expensive as in lots of locations in Europe, Canada, and the united states.
The prices of terrain and flats have already gone beyond the getting power of many owned by the middle-income groups.
The stock exchange in addition has seen a good share of the entry of undeclared money, which sometimes inflates the cost of stocks abnormally for a couple sessions throughout a particular time of a year.
Several business people say black money is going to be a double-edged sword for just about any nation. If the undeclared fund is not allowed in lucrative sectors, a big chunk of money will flow out of your country through illegal channels.
Alternatively, the provision to permit such funds in a few sectors could cause price volatility. That is being observed in the true estate sector.
Alamgir Shamsul Alamin, president of the Real Estate and Housing Association of Bangladesh, objected to the word black money.
"It is not black money; it really is undisclosed money."
About Tk 2,000 crore undisclosed cash was invested in the true estate sector by December of the current fiscal year, helping it to stay vibrant even through the pandemic.
The sector employs 30 lakh people, but it has not let go any workers through the crisis. And the thriving sector is contributing to the revival of the market, Alamin said.
He urged the federal government to retain its stance about the untaxed profit the housing sector in the upcoming budget.
"The scope should be provided for many years to come. It'll stop illegal capital airline flight. If the federal government fulfils our needs, it'll lead to a direct fall in the price for flats."
