Public outcry over government's black money legalisation policy

Several organisations and individuals have strongly condemned the government's decision to allow the whitewashing of undeclared income (black money) by paying only a 15% tax. Critics argue that this rate will discourage honest taxpayers who pay a maximum of 30% individual tax.

The Centre for Policy Dialogue (CPD), the Metropolitan Chamber of Commerce and Industry (MCCI), Unnayan Shamannay, Transparency International Bangladesh (TIB), and various political parties have all expressed their concerns about this policy.

Public criticism has also spread online, with many individuals voicing their disapproval on social media.

MCCI issued a statement on Friday, arguing that this policy "discourages regular, law-abiding taxpayers. It can be perceived as a penalty for taxpayers who comply with their obligations regularly."

The MCCI believes that stricter enforcement and higher tax rates for those with undeclared income would be a more effective approach.

Speaking about the black money legalisation provision in a post-budget briefing, Dr Fahmida Khatun, executive director of the CPD, said that the 15% tax rate with no investigation discourages those who pay taxes regularly.

"We have seen in the last few years that revenue collection does not increase much by giving this facility. Rather, it incentivises those with black money and discourages those who pay taxes regularly," she said.

CPD fellow Mustafizur Rahman said, "It is not fair for taxpayers to pay a 30% tax on legal income while only being asked to pay 15% on illegal earnings. Similarly, companies holding on to hidden money for a long time should not get away with a 15% tax rate. There should be stricter laws with penalties for earning illegally, including additional taxes."

Mustafizur further highlighted a new provision in the budget proposal that prevents any questions from being asked about the source of the income being legalised.

"Suppose, they whiten the money by paying tax but the Anti-Corruption Commission later enquires about it. But that cannot be done under the current budget proposal," he said on Friday (7 June).

He compared this new policy to the existing Income Tax Act, which allows black money legalisation with a higher tax rate (25%) and a penalty (10%), along with the possibility of future government scrutiny. This discourages many from utilising the option.

TIB has condemned the black money legalisation policy as "unconstitutional and unethical."

In a statement issued on 6 June, TIB expressed concern that the 15% tax rate with no investigation incentivises tax evasion and discourages honest taxpayers.

"This provision fosters an environment conducive to corruption. Additionally, it contradicts the ruling party's campaign promises of zero tolerance for corruption," stated TIB.

The organisation demanded the government withdraw this policy, which they view as money laundering.

Barrister Jamiruddin Sircar, a senior leader of the Bangladesh Nationalist Party (BNP), criticised the policy on Friday, calling it a "promotion of corruption."

"If black money can be legalised with a mere 15% tax, then there is no difference between honest taxpayers and those holding black money," he said at a discussion.

Jamiruddin believes confiscated funds should not be legalised.

"This policy encourages dishonesty. The government should reconsider allowing black money legalisation. There should be a clear distinction between earning money honestly and acquiring it easily," Jamiruddin, former Jatiya Sangsad speaker, urged the government to prioritise ethical means of income generation.

Atiur Rahman, a former governor of Bangladesh Bank, also spoke out against the policy at a discussion organised by Unnayan Shamannay, a private research organisation.

He argued that legalising black money is morally unacceptable and sends the wrong message regarding the government's commitment to fighting corruption.