The Bangladesh government’s recent decision to allow the “whitening” of black money through a 15% tax payment has ignited a firestorm of criticism from economists and anti-corruption watchdogs.
This move contradicts the Awami League’s pre-election promise to crack down on undeclared wealth and corruption.
Proponents, including the government, argue that the scheme will increase cash flow into the economy. However, past efforts have yielded meagre results.
Critics like Prof. Mustafizur Rahman of the Centre for Policy Dialogue condemned the policy as “licensing corruption.”
They point out that such amnesties create a perverse incentive for tax evasion, with people waiting for the next opportunity to legalize their ill-gotten gains.
The Bangladesh experience isn’t unique. Countries like India and Indonesia have also offered black money legalization schemes, but with stricter limitations and consequences for non-compliance.
Bangladesh, on the other hand, seems stuck in a cycle of repeated amnesties with minimal success.
Transparency International Bangladesh (TIB) highlights the ethical and legal issues.
TIB argues that the policy violates the constitution by criminalizing illegal income while rewarding it with a mere 15% tax. This creates a discriminatory system that discourages honest taxpayers.
The potential political fallout is also significant. Critics warn that the public will perceive this move as the government turning a blind eye to corruption. This directly contradicts the ruling party’s pledge of “zero tolerance.”
The government also plans to offer companies a chance to rectify “errors” in tax returns.
While the Dhaka Chamber of Commerce and Industry acknowledges the need for addressing legitimate issues, it emphasizes the importance of not legalizing illegal income.
The true extent of black money in Bangladesh remains unknown. Estimates point towards staggering figures, highlighting the immense challenge the nation faces.
The World Bank has previously criticized such legalization schemes, emphasizing their ineffectiveness in generating significant revenue and discouraging honest taxpayers. The Bangladeshi government finds itself at a crossroads.
Will it prioritize short-term gains over long-term economic health and ethical governance? Only time will tell if it can break free from this cycle of failed amnesties and truly address the black money problem.