bangladesh may 4 2013Speakers at a discussion in the city suggested the government Saturday not to permit whitening of black and undisclosed money in the upcoming national budget for fiscal year (FY) 2013-2014.

They think that such provision of illegal money whitening only encourages the unscrupulous people to continue doing their misdeeds. They also proposed to review the existing tax exemption criteria.

Equitybd, a network of right-based organisations, hosted the seminar styled 'Political economy of black money: undisclosed economy, national budget and resources mobilisation' at the National Press Club.

Member of Parliament (MP) Dr MA Mannan, prominent economist and also Professor of Economics Department of Dhaka University Abu Ahmed, Programme Director of ActionAid (policy and campaign) Asgar Ali Sabri, President of Economic Reporters' Forum (ERF) Khwaza Moin Uddin and Zakir Hossain Khan of Transparency International Bangladesh (TIB) addressed the discussion, among others.

Equitybd researcher Ahsanul Karim presented a keynote paper while the chief moderator of the organisation Rezaul Karim Chowdhury moderated it.

Mr Mannan urged the election commission to withdraw the budgetary limitation on spending during elections for the aspiring parliament members.

Prof Ahmed said black money legalisation just promotes the country's corruption and irregularities that help generate more black money.

"Regrettably, the so-called whitening system allows dishonest people to legalise their illicit money by paying only seven to ten per cent tax, while the regular taxpayers need to pay around 20 per cent, which is frustrating for them", he added.

He also criticised the government's unhealthy attitude towards increasing the common value added tax (VAT) that directly affects the underprivileged group of people.

"The government only mobilises 30 per cent of the state capital through direct taxing system while the remaining 70 per cent comes from indirect sources", he added.

He also said that the parliament must pass the Financial Reporting Act, which is fundamental to develop reliable audit reporting.

Prof Ahmed said multinational companies must be transparent in disclosing how much profit they are repatriating.

He also opposed the proposed 15 per cent VAT on all products and services in general saying that imposition of uniform VAT in general at the consumption level is frustrating.

The keynote presenter said the current annual capital flight is around $1.8 billion, which is much greater than the total annual foreign aid and loan of $1.2 billion.

Mr Karim said in South Asia, Bangladesh has the highest percentage of black money which is around 38 per cent of the total economy while in India it is around 23 per cent.

He suggested the government to review the existing tax exemption facilities that allowed its neighbouring India for 10 years' tax exemption of coal-fired power plant under Bangladesh-India Friendship Power Company (Pvt) Limited (BIFPCL).

Besides, tax exemption of parliament members that allows benefit of importing tax-free vehicles for which the country is deprived of around Tk 10 billion in taxes.

Published in The Financial Express