Economy
Proposed Budget’s 15% Tax on Black Money Sparks Debate Among Experts
The Institute of Chartered Accountants of Bangladesh (ICAB) has voiced concerns regarding the proposed budget’s provision to legalize black money with a 15% tax. According to ICAB, the budget fails to differentiate between legitimate and illegitimate income.
During a post-budget press conference held at the ICAB office in Dhaka, Md Humayan Kabir, a former ICAB president, emphasized the need for the budget to make this distinction clear.
Mohammed Forkan Uddin, the current ICAB president, while refraining from commenting on the benefits of legalizing undisclosed money at the individual level, argued that such provisions could be advantageous for companies. He noted that prior to 2020, many companies submitted multiple financial statements. The introduction of an online document verification system in 2020 exposed inconsistencies and irregularities in previous financial statements, limiting companies’ ability to display many assets. Forkan mentioned that the government had been considering granting amnesty to companies in this context.
In a separate event, Fahim Mashroor, a former president of the Bangladesh Association of Software and Information Services (BASIS), criticized the proposal to legalize undisclosed money. Speaking at the “Reflections of Budget 2024-25” program, co-organized by Policy Exchange Bangladesh and Snehasish Mahmud and Company Advisory Services, Mashroor highlighted the disparity in tax rates. He noted that while he faced an effective tax rate exceeding 40%, others could legalize their wealth at a mere 15% tax rate. Mashroor expressed concern over potential capital flight, arguing that such policies could encourage wealth to be moved out of the country despite short-term revenue gains for the government.
During the same event, M Masrur Reaz, chairman of Policy Exchange Bangladesh, presided over the program, and Snehasish Barua, director of SMAC Advisory Services, presented the keynote paper.
Meanwhile, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Mahbubul Alam, in a briefing, stated that dishonest traders should not be favored. He emphasized that undisclosed money should not be used for criminal activities and called for encouragement of honest traders who have been consistent taxpayers. Alam acknowledged that some taxpayers might have inadvertently failed to disclose all their income and advocated for giving them a chance to rectify this.
Addressing the issue of tax equity, Bangladesh Institute of Development Studies (BIDS) Director General Binayak Sen criticized the flat 15% tax rate for legalizing undisclosed income and assets. Speaking at a discussion on the “National Budget for 2024-2025 and the Medium-Term Outlook on the Bangladesh Economy” held at the BIDS office in Dhaka, Sen argued that tax rates should be proportional to the amount of undisclosed income or assets. He recognized that legitimate income might be undisclosed for various reasons and supported providing an opportunity to disclose such income. However, Sen opposed an absolute tax exemption or a fixed rate for disclosing undisclosed income, suggesting that the tax rate should range from 10% to 30% depending on the amount disclosed.
Sen also pointed out that unofficial transactions, particularly in sectors like land, could benefit from a provision to disclose such money during regular tax returns. He reiterated that the tax rate should be variable based on the amount of undisclosed money.
Chief Adviser Prof Muhammad Yunus on Thursday paid tribute to the Armed Forces Division by placing a floral wreath at its headquarters.
Prof Yunus, who visited the division as part of his official duties, laid the wreath to honor the sacrifices and dedication of the members of the Armed Forces.
Following the wreath-laying ceremony, he signed the visitor’s book.
Chief Election Commissioner (CEC) Kazi Habibul Awal, along with four other election commissioners, announced their resignation during a press conference today at the Election Commission (EC) building. The resignation follows growing speculation and pressure.
CEC Awal stated, “In this changed situation, I and other commissioners have decided to step down. We’re handing over our resignation letters to the EC Secretary to send it to the President.” After submitting the letters, the CEC and some commissioners quickly left the premises, with no clear explanation for the absence of two election commissioners.
The resignations come amid increasing unrest tied to the registration of political parties such as Nagarik Oikya and Gono Odhikar Parishad. Sources revealed the CEC felt unsafe due to aggressive behavior from activists, prompting the decision to step down.
Protesters outside the EC building hurled shoes at vehicles carrying Election Commissioners Rashida Sultana, Md Alamgir, and Anisur Rahman as they left. Meanwhile, preparations for their exit had already been underway, with the commissioners reportedly relocating personal belongings from their offices.
The commission, appointed in February 2022 for a five-year term, had previously expressed confusion over demands for their resignation, maintaining they had conducted fair elections. However, internal discussions led to the collective decision to resign earlier than expected.
The government will now purchase LNG from the international spot market through open tender instead of negotiation.
Cabinet Committee on Economic Affairs (CCEA) in a meeting on Wednesday in principle approved a proposal in this regard.
Adviser of the interim government for Finance Dr. Salehuddin Ahmed, who presided over the meeting, said that the government will procure LNG through open tender.
The Energy and Mineral Division of the Ministry of Power, Energy and Mineral Resources placed the proposal where it sought approval to import LNG from 23 listed companies in the international spot market.
The adviser said that though such 23 companies were enlisted by the previous Awami League government and signed Master Sales and Purchase Agreement, they will remain unchanged.
He said that instead of applying the Speedy Increase of Energy and Power Supply (Special) Act 2010, the interim government will follow the Public Procurement Rules 2008 to ensure the competitive bidding process.
“We don’t want to change them as we wanted to import LNG quickly, ensuring proper competition among the suppliers,” he told reporters.
Committee also approved another proposal in principle to sign a contract to import urea fertiliser for the 2024-25 fiscal year from Fertiglobe Distribution Limited, UAE, on a G-to-G basis.
Meanwhile, the Cabinet Committee on Government Procurement (CCGP) in a meeting, presided over by the Adviser for Finance, approved 3 proposals for import of lentil and fertiliser.
As per the proposal, the Trading Corporation of Bangladesh will procure 10,000 metric tons (MT) of lentil from local firm Sahara Enterprise at a cost of Tk 98.20 crore with each kg priced at Tk 98.20.
The Commerce Ministry which moved the proposal on behalf of the TCB in the meeting mentioned in the proposal that the supplier firm was selected through open tender.
The CCGP approved two separate proposals of the Industries Ministry under which Bangladesh Chemical Industries Corporation will import 30,000 MT of bulk granular urea fertiliser from Fertiglobe Distribution Limited, UAE, under state to state contract at a cost of Tk 121.48 crore.
Each metric ton of fertiliser will cost $343.17.
Another 30,000 MT of bagged granular urea fertiliser will be procured from the local Karnaphuli Fertilizer Company Limited (Kafco) at a cost of Tk 116.99 crore with each metric ton costing $330.50.
