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.
Expatriate Bangladeshis sent approximately US$ 2.11 billion in remittances during the first 28 days of September in the fiscal year 2024-25, according to data released by Bangladesh Bank on 29 September.
Of this total, state-owned and specialised banks handled $679.10 million, while private banks received $1.43 billion in remittances.
Chief Adviser to Bangladesh’s interim government, Professor Muhammad Yunus, has vowed to expedite reforms and hold elections swiftly. Yunus, who recently assumed the role after the collapse of Prime Minister Sheikh Hasina’s 15-year administration, expressed his commitment during an interview with Tokyo-based news outlet NHK WORLD in New York on Sunday. He was attending the United Nations General Assembly at the time.
Following mass student-led protests that ended Hasina’s long-standing rule in August, Yunus stepped in as the leader of the caretaker government. Known for founding Grameen Bank, an institution providing microloans to the underprivileged, Yunus, along with the bank, earned the Nobel Peace Prize in 2006 for his efforts in poverty alleviation.
During the interview, Yunus emphasized that the interim government’s primary mission is to implement reforms promptly and ensure elections are held as soon as the groundwork is complete. He underscored the importance of success, stating, “Failure is not something that we can accept.”
Addressing the pivotal role of students in the ousting of the Hasina administration, Yunus acknowledged the sacrifices made by young people, referring to their involvement as part of a “revolution.” He highlighted his intention to engage the younger generation in shaping policy.
Furthermore, Yunus called for continued support from Japan, Bangladesh’s largest donor, during this crucial transition period. He stressed that Japan’s assistance is vital to stabilizing Bangladesh’s economy and fostering a democratic foundation in the nation.
Syeda Rizwana Hasan, the Adviser for Environment, Forests, and Climate Change, announced today that steps will be taken to restrict the use of polythene shopping bags to safeguard future generations.
Starting from October 1, polythene bags will be banned in shopping malls, followed by a ban in kitchen markets from November 1.
“Everyone must take responsibility and stop using polythene voluntarily. Action against polythene producers will begin from November 1,” Rizwana Hasan stated during a seminar.
The Department of Environment (DoE) organized the seminar to raise public awareness about alternatives to banned polythene bags.
Rizwana Hasan highlighted that the restriction on polythene will be executed in phases according to legal provisions, and discussions with shopping centers and store owners are ongoing to ensure a smooth transition.
She also announced plans to make the government secretariat a plastic-free zone by December.
Other speakers at the seminar included Environment Secretary Dr. Farhina Ahmed, DoE Director General Dr. Abdul Hamid, Director Rajinara Begum, President of the Shop Owners Association Muhammad Helal Uddin, and Md. Arifur Rahman Bhuiyan, Assistant Professor of Environmental Science at BUP. They discussed the harmful effects of polythene and the need for alternative products.
Earlier, Rizwana Hasan inaugurated a fair showcasing eco-friendly alternatives to polythene bags and visited 24 stalls. The fair featured products from government and private entrepreneurs, including reusable bags, jute bags, paper bags, and items made from bamboo and cane.
