Muhith Has New 'Black Money' Idea
Monday, 22 June 2009

A M A Muhith, the finance minister, on Sunday came up with 'a new idea' which would give incentives, similar to those offered to tax dodgers, to regular tax payers if they invested in the government-prescribed sectors.

"I have my own thoughts or idea on the issue," Muhith told delegates of the Foreign Chamber (FICCI) in Dhaka. "Investment incentives can be offered to all—people with any income, disclosed or undisclosed.

"Anyone investing in these (government prescribed) areas may be asked to pay 15-20 percent tax. In case of white [disclosed] money, the government would return a sum, maybe 10 percent of total money invested, to the investor."

But the minister ruled out any chances of executing any such plan in 2009-10. He however again hinted at reviewing the black money terms spelled out in the proposed budget.

Muhith was clearly seeking to create a level playing field for all amid widespread criticism kicked off by his budget speech proposal to tax black money at the rate of 10 percent for an unprecedented three years.

Muhith offered the incentive to draw huge sums of black money—no specific figures available for obvious reasons—into the formal economy and listed a number areas of investment. "This is unethical. Not acceptable from legal point of view. This has been done only attract more investment in a gloomy economic environment."

But critics across the political divide have seen the move as one unfair to honest taxpayers.

Last year, the government offered amnesty to tax dodgers but slapped a 7.5 percent fine on top of the regular 25 percent.

The finance minister himself has admitted since his June 11 speech that the flat 10 percent no-questions-asked offer goes beyond any ethical standards.

Speaking to FICCI members, the minister also agreed with view that such an offer would prolong the culture of evasion in Bangladesh and that criticism reflected the realities.

"This criticism has a very important aspect. The new generation of voters have supported us overwhelmingly. We must review this considering their future."

Waliur Rahman Bhuiyan, the FICCI chief, was all praise for the budget but the black money plan. "This budget reflects a vision. PPP is a great concept. This can really take the country forward," Bhuiyan said.

He proposed at least 25 percent for the tax dodgers "to encourage the honest tax payers".


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