Kazi Zahidul Hasan :
A former NBR chief expressed reservation over the existing budgetary provision to legalize black money and called upon the authorities to review this unethical provision which gives protection to tax cheats, looters, money launderers and stimulate corruption and escalate economic disparity in the country.
“Giving the opportunity to whitening black money, the way it has been provisioned, is unconstitutional, immoral and contradictory to the ‘zero tolerance for corruption’ posture of the government. The tax waiver to whiten the ill-gotten money is unjust with honest and regular taxpayers,” said former NBR Chairman Dr Muhammad Abdul Mazid.
He said money not declared for avoiding tax, money earned by committing crimes and corruption is being termed as a wholesale ‘undisclosed income’ and being whitened by paying tax incentive and without any question about its source is rather offensive.
“The policy has created a situation where honest and regular taxpayers are paying 15 to 25 per cent tax every year, while tax cheats and other offenders are whitening their money by paying 10 percent tax only,” he added.
In the current budget year, the government has given the scope for investing untaxed money in the capital market, savings certificates, bonds or any other securities, paying a flat 10 per cent tax within 30 days of their investments without any penalty.
“In the way to invest the money no one, not even the income tax authority, will be able to question its source. The policy is discriminatory and will be apparent or tantamount to institutionalization of corruption”, commented Dr Mazid.
When asked, he said, “If the government wants to allow black money holders for investment, it should be done through (a) regular tax and penalty (b) without any amnesty and ( c) must be declared within a very limited and specific time frame, after which ( d) stern action will be initiated against for the holders of black money. After legalising the money government may invite them to invest in the form of bond or tax holiday scheme in the infrastructure built up or labour intensive job creating or human resource development projects .
It should be reviewed that if the whitening scheme run for indefinite period then the necessity of scheme itself is jeopardized, demoralised, if tax discrimination is created, it not only tax justice denied, it might discourage existing tax payers, keep new tax payers more at bay. The tax amnesty (no question of source raised) might induce or rewards illegal and corrupt behavior and discourages honesty. Besides, it sends a message to the society that the authority (which is constitutionally bound to establish rule of law) is the protector of corruption and illegality.”
He further said that available evidences render any financial argument illogical and unacceptable for such a provision as no substantial revenue has been earned as a result of the provision made over the years.
According to NBR, in the first nine months of the current fiscal year, 10,034 people legalized cash and assets worth Tk142.95 billion under the scheme. The NBR received Tk14.39 billion in taxes against the disclosure.
Of them, a total of 9,693 people whitened Tk138.60 billion mainly in cash, fixed deposit receipts, saving certificates and assets. They have paid Tk13.90 billion in taxes against the disclosure.
Also, 341 people legalised Tk4.35 billion through investment in the capital market and paid Tk490 million in taxes.
“Despite opposition from economist and various quarters, the government has been offering the facility over the years because it has to compromise with corrupts and powerful quarter in the game of politics. If the core principles of honesty, equality and justice are compromised for politics, then politics will have nothing to do with public interest and democratic values”, said Dr Mazid.
Responding to a question, he said the government has been formulating highly ‘ambitious’ budget every year setting ‘unrealistic’ income and expenditure targets without considering macroeconomic reality of the country.
“The government machinery has limited capacity to implement such a huge budget and so, most of the key budgetary goals remain unmet finally, he added.
Bangladesh government will announce the budget for fiscal 2021-22 on June 3. The size of this budget is likely to be Tk 6.02 trillion, 6.14 percent higher than the original budget of Tk 5.68 trillion for the current budget year, according to a draft budget proposal.
“The budget will be placed at a time when the economy is struggling to recover from the impacts the Covid-19 pandemic. So, it should be focused on economic recovery and rehabilitate the industries and people affected by the pandemic,” said Dr Mazid.
When asked, he said, the government should recast the higher revenue collection target in the next budget considering the current perspective of the domestic and global economy, which have been seriously affected by the ongoing coronavirus pandemic.
“In the past several years, the government has been setting ‘lofty’ revenue collection target ignoring the productivity of the economy itself from where the revenue should be generated and also, of course, the capacity of revenue board. NBR was supposed to set the revenue target previously. But now the target is being set by the Resource committee from the top. In such a situation if NBR faces criticism for failing the meet the target which is very ill-starred,” he observed.
Sources said, the government is likely to set Tk 3.89 trillion revenue target for the next fiscal year. Of the total amount, Tk 3.30 trillion will be contributed by the NBR.
“The government must pursue a pro-tax payer policy with organisational and procedural reforms in the revenue administration for bringing buoyancy in tax collection from the individual taxpayers as well as corporates and thus expanding tax base,” said Dr Mazid.
Apart from this, he said, “The government needs to initiate steps to improve operational efficiency in the tax administration and reduce stresses in the whole system to get a positive response from the taxpayers.”
“There is none denying there have been improvements in revenue collection by the officials in recent years with more people becoming tax-complaint. But a sizeable section of the population still continues to be tax-shy mainly due to absence of a friendly environment and old-age complexity in the tax administration,” he added.
