The real estate organisation REHAB has criticised the government’s proposed U-turn on rules that allow undisclosed money to be legalised through investment in the real estate sector and payment of a 10% penalty tax.
It is worth noting that the chair of the National Board of Revenue has stated that such initiatives which allow so-called black money to be ‘whitened, ’ should be expanded to other sectors to bring economic benefits.
According to the Global Financial Integrity Report 2013, from 2009-2013, more than Tk2,098 crore was whitened in Bangladesh, against which the NBR received Tk279.29 crore in taxes
These amounts are small compared to the report’s annual estimate of $1.6bn in illicit financial flows from Bangladesh. It is apparent that though there is a fair case for continuing and expanding such initiatives, they probably do little to alleviate the overall loss of capital.
The best way to end the problems caused by the large amount of undisclosed money in the economy, is to simplify taxation and currency exchange rules, so there is no incentive to hide capital and income.
To operate efficiently, a modern economy requires people to be able to spend their own legally earned money as they see fit best, without being constricted by onerous conditions.
Outdated restrictive rules only worsen the problems of corruption and money laundering while holding back investment in the economy.
We should move towards deregulating currency controls completely as a means to ending perverse incentives and attracting more capital for investment.