The government plans to allow black money in the share market under pressure from different quarters after it has proposed investment of the undisclosed money in government bonds.
The National Board of Revenue has already prepared a proposal in this regard and it will be sent to government high-ups soon.
“We will place a proposal to the government; no decision has yet been taken,” an official of the NBR told The Daily Star yesterday.
The parliamentary standing committee on finance ministry and other quarters have pushed for allowing investments of undisclosed money in the stockmarket as a temporary arrangement.
The NBR official said they will place the proposal to the government high-ups taking into consideration these recommendations.
However, economists said such scope would again inflate the market artificially. Black money holders would invest in the market and eventually leave it after whitening the money, they said.
The finance ministry has also prepared an analysis report on 'underground economy' which mentions presence of a huge amount of black money in the economy. It indirectly favoured creating scope for whitening money.
Finance ministry officials said the report was prepared last month, and on the basis of the recommendations of the report a proposal has been made to give scope for whitening money through investing in government bonds.
In a post-budget press conference Finance Minister AMA Muhith said the amount of black money is 45 percent to 81 percent of the GDP in Bangladesh. The finance ministry official said the minister quoted the amount from the analysis report.
The report said about 45 percent to 81 percent of the country's economy was underground in 2010. It said, when a big portion of the economy remains outside formal economy, it creates 'asset bubble' and it may have a negative impact on macro-economy.
It is not unlikely that there may be a link between the underground economy with the recent high prices of land and bullish trends in the capital market, the report said.
It also said the provision of whitening money did not bring much benefit to the economy. In the last four decades after the independence scope to whiten money was given on 11 occasions and from this the government got only Tk 1,400 crore in taxes, the report added.
It said only Tk 18,000 crore was whitened through these opportunities.
In the last four decades, the tax network did not expand keeping pace with the rate of development in the economy. With the economic growth, the underground economy also marked a continuous rise, the report said.
There is no alternative to bringing under the tax net the undisclosed money active in the underground economy, it said.
However, Research Director of Bangladesh Institute of Development Studies (BIDS) Zaid Bakht said the difference in the range of underground economy provided in the analysis report is so wide that it does not look like a precise estimate.
"It can be termed as a guess work, which is like counting the stars in the sky," he said.
Bakht said it is not right that if anybody buys a flat or deposits the money in bank, the undisclosed money does not play any role in the country's economy.
He said any illegally earned money should not be allowed to be legalised.
Former finance adviser of caretaker government Mirza Azizul Islam, senior economist of the World Bank Zahid Hussain and former chief executive officer of Dhaka Stock Exchange Prof Salahuddin Ahmed also strongly opposed giving scope to whiten money.
Comments
Post a Comment