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Friday, April 07, 2006

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HEADLINE
 
Black money whitening move shows poor outcome
Shakhawat Hossain
4/7/2006
 

          The holders of black money are showing less interest in putting their illegal funds in the real economy by paying only 7.5 per cent tax. Only an amount of Tk 8.0 billion of such money has been legalised until March last.
"The amount of black money whitened during the last nine months is not significant compared to that of the previous fiscals," said a National Board of Revenue (NBR) high official.
The amount should be much higher as the current fiscal is the last year for whitening black money by taking advantage of the fiscal provision. But so far only 800 black-money holders availed themselves of the opportunity.
Despite severe criticism from different quarters, Finance and Planning Minister M Saifur Rahman extended the black money whitening provision for one year more under the current budget.
The opportunity was extended aiming at bringing huge illegal money in the real economy. But the present trend suggests that the aim will not be realised in the remaining three months of the fiscal, the official added.
A huge amount of illegal money will remain outside the net and thousands of black-money holders will able to dodge taxes ahead of the next general election.
The NBR officials said the income tax depart ment earned some Tk 450 million as taxes by legalising some black money during the last nine months.
But the income could have been much higher had the government not extended the provision for another year. The country has been deprived of a huge amount of tax due to continuation of such incentive for years, the sources said.
The provision for legalising the illegal money has been offered six times during the last 35 years since the country's independence in 1971. However, it covered nine fiscal years totally including the current one.
According to a NBR study conducted last year, some Tk 36.95 billion black money was injected into the real economy under the provision.
The money whitening provision was first introduced in fiscal 1975-76. Only Tk 700 million was legalised on that occasion.
During the fiscal 1987-88, Tk 2.00 billion was injected into the formal economy. The next fiscal saw whitening of Tk 2.50 billion. The fiscal 1989-90 saw another Tk 4.00 billion whitened.
The amount of black money whitened during the fiscal 2000-01 was Tk 10.00 billion.
In fiscal 2002-03, the government withdrew all taxes on whitening black money for the first time. The facility was made available for the next three fiscals, provided that 100 per cent of the declared amount of black money was invested in industry, service or the capital market.
Yet, only Tk 17.75 billion of black money came in real economy during the past three fiscals.
There is no actual data about the size of country's black money. However, an independent study assessed that the size of black economy is Tk 700.00 billion -- little higher than the size of the current fiscal year's budget of Tk 643.83 billion.

 

 
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