Amnesty to bring back black money yields no result
The maiden tax amnesty offered by the government to bring back laundered money home has seemed to have brought no result since none secured the facility in the first six months of the current fiscal year.
In the past, governments offered opportunities to whiten untaxed money generated in the country. In June, the government unveiled the scope to legalise the money that has been laundered abroad, the first of its kind. The funds can be legalised by paying a 7 per cent tax.
The government initiated the move to boost revenue as well as mobilise foreign currencies at a time when Bangladesh's foreign currency reserves have come under pressure amidst global economic turmoil.
As per the offer, no question could be raised by any authority, including the income tax department, about the source of any undisclosed asset located outside of Bangladesh if the taxpayer pays the tax.
Recently, Finance Minister AHM Mustafa Kamal told The Daily Star that the government has nothing to do if no one avails the opportunity.
"We did not prepare the budget taking this offer into consideration. We have kept this opportunity in the budget."
Recently, Finance Minister AHM Mustafa Kamal told The Daily Star that the government has nothing to do if no one avails the opportunity
Ahsan H Mansur, executive director of the Policy Research Institute, thinks the money that has been laundered abroad might have got stuck there, so the launderers are now trying to legalise the money in Bangladesh.
If money launderers can't legalise their money abroad, they might then avail the government's opportunity. But they would try to whiten the money abroad until the last minute. So, they might not bring the money back ultimately, said the former economist of the International Monetary Fund.
Prof Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, questioned: "Who will bring laundered money back home?"
"By offering such an opportunity, the government has earned discredit. It has not achieved anything."
In June, the CPD described the offer as morally unacceptable, economically unrealistic and politically unhelpful.
"This is now proven that the move is economically unrealistic," said Prof Rahman.
The money has been smuggled through illegal means like hundi, so people would not bring the money back no matter how much immunity is given, he said.
According to Prof Rahman, the move is politically unhelpful because common people never take the opportunity.
Zahid Hussain, a former lead economist of the World Bank's Dhaka office, said it was difficult to fathom why the government had offered such an opportunity.
"If it was only due to tax evasion, then there would be a logic to bring back the money using the tax concession. But the money that goes out of the country is the money that is earned through corruption or illegal means."
Legally disclosed money may also be sent out due to a lack of investment environment in the country. But Hussain doesn't think that is an important reason for money laundering.
"The big reason for money laundering is either the money is illegally earned or generated through corruption," he said.
When people don't feel safe keeping that illegally earned money in Bangladesh, they smuggle it to a safe haven, he said. "Why would they bring that money back home?"
"It is naïve to assume that people would bring back the illegally earned money by paying the tax."