AS BEFORE, the government is reportedly going to allow whitening of black money in the upcoming National Budget for FY 2016-17 on payment of certain punitive tax rates. Terming the privilege unconstitutional and unethical, TIB on Tuesday in a statement urged the government not to keep any provision for whitening black money in coming budget as quoted in a media report on Wednesday. By providing this opportunity, the government is actively fostering the black economy, which has been rapidly criminalizing our politics and society while encouraging the economics of corruption at all levels.
Since 1976-77, all successive governments provided the opportunity to whiten black money. The main motive had been to retain the money within the economy; which would otherwise go out of the country and use it to foster development in certain sectors such as the housing industry. It may not be unlikely that there is a link between the underground economy and the housing sector. Whenever a huge amount of money is poured into a certain sector, it artificially increases prices. The sharp rise in the prices of housing assets in recent years could depict the presence of an ‘asset bubble’. The leap in housing prices turns out to be an obstacle for many as buying a flat now appears to be out of their financial reach. Resultantly, it failed to achieve its desired goal; rather it has promoted corruption. Many used the scope for whitening their money in the past years so that they have to pay less tax. This means they resort to illegal ways for legalizing black money.
The concerned authorities stated that only the money earned through legal ways could be whitened. But the reality is that the NBR has no mechanism to verify whether an amount of untaxed money is earned through legal or illegal ways. It is just unaccounted money. If it cannot be verified whether an amount of money is earned through legal ways or not, what’s the logic behind giving the scope is the big question. So, experts hold the opinions that the government should formulate a law for black money and hidden property to bring it into the mainstream economy. Once enacted, the law would make the entire process transparent and whitening of black money more realistic.
As it appears the opportunity for whitening black money is given almost every year but it has failed to bring back enough money into the mainstream economy. Moreover, it is unacceptable that cohorts of millionaire businessmen will take the opportunity to whiten black money at a low tax while honest people pay the highest on regular basis. When illegal money now dominates the economy and political leaders lack proper commitment to end it other than lip service, there is hardly any chance that this opportunity will help reduce black money by becoming white.
Since 1976-77, all successive governments provided the opportunity to whiten black money. The main motive had been to retain the money within the economy; which would otherwise go out of the country and use it to foster development in certain sectors such as the housing industry. It may not be unlikely that there is a link between the underground economy and the housing sector. Whenever a huge amount of money is poured into a certain sector, it artificially increases prices. The sharp rise in the prices of housing assets in recent years could depict the presence of an ‘asset bubble’. The leap in housing prices turns out to be an obstacle for many as buying a flat now appears to be out of their financial reach. Resultantly, it failed to achieve its desired goal; rather it has promoted corruption. Many used the scope for whitening their money in the past years so that they have to pay less tax. This means they resort to illegal ways for legalizing black money.
The concerned authorities stated that only the money earned through legal ways could be whitened. But the reality is that the NBR has no mechanism to verify whether an amount of untaxed money is earned through legal or illegal ways. It is just unaccounted money. If it cannot be verified whether an amount of money is earned through legal ways or not, what’s the logic behind giving the scope is the big question. So, experts hold the opinions that the government should formulate a law for black money and hidden property to bring it into the mainstream economy. Once enacted, the law would make the entire process transparent and whitening of black money more realistic.
As it appears the opportunity for whitening black money is given almost every year but it has failed to bring back enough money into the mainstream economy. Moreover, it is unacceptable that cohorts of millionaire businessmen will take the opportunity to whiten black money at a low tax while honest people pay the highest on regular basis. When illegal money now dominates the economy and political leaders lack proper commitment to end it other than lip service, there is hardly any chance that this opportunity will help reduce black money by becoming white.
