Nod to black money but for whom

Black is defined as non-existence of colour while white is the opposite, combination of all colours. So, psychologically, white is supposed to be more desirable than black. But this is not happening at all. Black appears all the more desirable — black diamond, black market, black magic and the list goes longer. Soon after his appointment as the Railway Minister, Mr Suranjit Sen Gupta, MP paid high attention to find out “black cats” of railway that he claimed to be responsible for mal-governance and huge loss in this public sector. Just a couple of months later, the whole country witnessed some black cats caught incidentally with handful amount of money by the Boarder Guard Bangladesh. The aftermath is already known to the readers. Mr APS said that he was the sole owner of the money and the other two did not make any claim. The source of the huge amount of money is a big question but it can be assumed that he did not declare this money in the last tax year. Therefore, the colour of this untaxed money is BLACK. This is rather “Blood Money” as it was made out of the blood of ordinary people who paid this money as bribe to get a job.

ImageThe government in the current fiscal year has given the opportunity to whiten “Black Money” with an option of paying the regular tax plus a 10% fine. Arguments are there that such opportunity will lure investment. But it will be very unfortunate if it let hoodlums go unchallenged with their blood money. As the budget is placed in June, black money becomes a hot topic across Bangladesh during the month of May-June. This year was no exception. A number of discussions and seminars took place that strategised ways to bring black money in the mainstream economy. Most of these discussions opined for allowing whitening of black money by paying regular tax plus a fine and the government gave a final nod to this demand.

The most lucrative job in Bangladesh is probably the job of a sales assistant at Titas Gas. Our manageable system allows a simple sales assistant to earn thousands of crores of taka money and favours him to become an industrialist. Readers might remember that during the last caretaker era, the joint taskforce commissioned to unearth corruption in the state owned Titas Gas discovered that 68 Titas staff owned property worth Tk 10,000 crores. One sales assistant topped the list by owning property worth Tk 2,100 crore. The much talked about sales assistant now owns industrial group consisting of 11 sister concerns. The next most lucrative job is probably the job of an APS to a minister. The former APS, believed to be mastermind of the railway-gate scandal, is aged 34 or 35, but owns a flat, a car and 18 acres of ancestral land. Besides, he runs a deposit pension scheme of one hundred thousand taka a month. Fortune smiled at him in every way and he is probably now sneering to those who reported against him and demanded a fair probe of railway-gate.

Now we have to wait to see whether the government will allow whitening of such black money made out of bribery or unlawful activities.  To justify government’s decision, the finance minister argued that the government did do so to stop money laundering, combat corruption and increase investment. We undoubtedly need more and more investment but it is our high expectation to the government that it will not encourage the above stated kind of people. Though there is no accurate figure, the amount of black money in Bangladesh economy, roughly estimated, ranges between 42-82% of GDP. It is a clear indication that Bangladesh is crippled with corruption — bribery, dacoit activity, fraudulent transactions in public and private entities and falsification of assets etc. Apart from these sources, a large amount of earned money remains untaxed, popularly known as undisclosed. The government, in this regard must draw a clear distinction between “black” and “undisclosed”, and that it must not under any circumstances will allow whitening of black money. There should be clear provisions that institutions like Anti-Corruption Commission (ACC) can challenge such income, and if necessary, can bring them under trial. A blind eye to black money will only discourage the taxpayers. Regular tax plus a 10% fine for “undisclosed” but honest income may be alright but it is expected that it will not be continued once FY2012-13 is over. There are a large number of people who does not pay income tax even after being eligible. There is a strong need for regular campaign to encourage people to pay tax in due time. The government can further strengthen the National Board of Revenue by increasing its human resource; can take measures to enhance the capacity and can further ease the tax paying procedures. It is encouraging to see that the NBR has already taken some positive steps including online self-assessment of tax, e-payment, yearly tax fair etc.

As stated above our policymakers are expecting a dramatic change in the investment scenario. Let us take a look at the history. On June 1, a report in a local English daily quoted NBR statistics saying Tk 12,996 crore has been whitened since 1975. The state has earned a nominal Tk 1,368 crore as taxes. Besides, none took the opportunity to whiten black money through investment in the share market. A big hype was raised by capital market godfathers to allow black money in this sector which only contributed to further manipulation of the capital market. What is the use of allowing such provision once again when such little amount has been whitened over the last 37 years since 1975? The government is yet to take any firm action against the capital market manipulators who are believed to have earned thousands of crores of taka through market manipulation. It is widely believed that the investigation committee led by veteran economist Ibrahim Khaled identified market manipulators and recommended some specific measures. The country is yet to see the manipulators under trial and implementation of the recommendations. It is widely anticipated that nominal amount of black money will be whitened this time due to the harder whitening provision. Therefore, it would not be unjust to reach to the conclusion that those who are whitening black money are very few in numbers but certainly have strong influence over the policymaking process.

Something is very wrong with the existing democratic system — irrespective of political parties in power; it has favoured whitening of black money. Bangladesh Nationalist Party-led government allowed whitening of black money in 1991-1996 and 2001-2006. According to the then Chairman of the National Board of Revenue (NBR) Mr Khairuzzaman Chowdhury, a total of Tk 2,500 crore was whitened, by the end of third week of June 2006.  This time the black money holders had to pay a trivial 7.5% tax. Surprisingly when the finance minister placed the budget of FY 2012-13, the opposition leader came down heavily on the government for allowing black money in the upcoming budget. She alleged that this was done to help the newly formed banks. She added that if elected next time, her government will not give any such opportunity. Now a question can genuinely be raised that why did her government allow whitening of black money then. Even then, we believe from the bottom of our heart that things will change. The present government in its first year allowed whitening of black money. Although it was discontinued later, a second chance was offered in third year against investment in stock market. The effort in fact went in vain. The election manifesto of Bangladesh Awami League which claims itself as a “Charter of Change” says, “The rape of the democratic constitution, rehabilitation of war criminals and religious fanatics, criminalisation of politics and promotion of militancy, institutionalisation of corruption, and the sway of black money and muscle power overtook the post-Bangabandhu government”. So another nod to black money will only strengthen the sway of black money.

Although the last caretaker government earned sharp criticism for its many anti-democratic activities, it was them who for the first time in history of Bangladesh established “truth commission” and launched massive drive against black and laundered money. But with the change in power everything went in vain. The truth commission was abolished and well-known figures who often talk about good governance and transparency stood by their side in the courtroom. Ordinary people like us do not have any authority to challenge the policy of a democratically elected government. We can, however, only disagree with such policy that rejects the fundamentals of democratic system — transparency and good governance. We are hopeful the present government will call it a day for black money and the party or coalition which will run the country in future will do the same.

This article was published in on 10 July 2012. Click here to read 

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