Undisclosed assets worth a staggering Tk 14,295 crore have been legalised in the first nine months of this fiscal year.
At least 10,034 people paid Tk 1,439 crore in taxes to legalise the record amount of assets, taking the opportunity the government gave aiming to boost the economy during the pandemic, said a high official at the National Board of Revenue (NBR) yesterday.
Some 9,693 people legalised assets by paying Tk 1,390 crore in taxes for their undeclared fixed deposit receipts (FDRs), saving certificates, cash, and properties.
They legalised assets worth Tk 13,860 crore. Of the amount, 90 percent was in cash, FDRs, saving certificates, etc, the official said.
Another 341 people, who had invested their undisclosed money in the share market, paid Tk 49 crore in taxes to make Tk 435 crore in investments legal.
In 15 tax zones in the capital alone, some 4,885 people legalised assets by paying around Tk 980 crore against their undisclosed FDRs, saving certificates, cash, and homes.
Another 204 legalised their share market investments paying Tk 34.02 crore.
In four tax zones in Chattogram, 1,106 people took the government issued opportunity and paid around Tk 121 crore against their undisclosed FDRs, saving certificates, cash, and homes.
Some 52 legalised their investments in the share market by paying Tk 4.51 crore in taxes.
A total of 544 people legalised undisclosed assets in Khulna, 538 in Cumilla, 488 in Narayanganj, 387 in Rangpur, 369 in Gazipur, 295 in Rajshahi, 263 in Bogura, 241 in Mymensingh and 230 in Barishal.
The window the government provided to legalise undisclosed assets ends on June 30.
The NBR official, however, said the rate of legalising undeclared money dropped significantly in April due to what the official said was the second wave of Covid.
The top records of legalising undisclosed assets were in fiscal years 2007-08 and 2008-09 when the army-backed caretaker government was in power.
At that time, Tk 9,682.99 crore in total was legalised, according to NBR data.
The government this fiscal year allowed legalisation of undisclosed assets to accelerate economic growth, increase investments, and develop the stock market as previous attempts did not pay off.
It introduced a provision that no authority, including the NBR and the Anti-Corruption Commission, could question the sources of the legalised assets.
People were allowed to disclose any undisclosed homes, land, buildings, or flats by paying taxes as per the size of the property.
They were able to legalise undisclosed cash, bank deposits, saving certificates, shares, bonds or any other securities by paying 10 percent in taxes.
They were also allowed to invest in the capital market for at least a year and show the investments in their tax returns.
Talking to The Daily Star, Zahid Hussain, former lead economist at the World Bank's Dhaka office, said the scope for legalising undisclosed assets was on a limited scale before and the latest one was quite liberal.
Since no agency could question the matter, a lot of money was legalised.
"But we cannot see the other side of this… What is the impact of such an opportunity on honest taxpayers who paid a lot more in taxes abiding by the rules? This matter needs to be considered," he said.
"Why would the honest taxpayers pay taxes when many legalised their undisclosed assets paying only 10 percent in tax?" he asked.
An individual can end up paying as high as 25 percent income tax a year.
He said if this opportunity was given due to the pandemic, then why were honest taxpayers not given a similar opportunity?
To even consider the economic benefit of such a step, it needs to be seen if it has increased revenue, then how much, if at all, he said.
No policy should have so much discrimination, said the economist.
Former NBR chairman Nasiruddin Ahmed said such opportunity has been given due to the pandemic.
The high amount of legalised money was due to authorities being barred from questioning the sources of the money, he opined.
Regarding benefits to the economy, he said, "Tk 14,000 crore is not that much compared our GDP of around Tk 23 or Tk 24 lakh crore."
Such opportunities are given for the benefit of some individuals and it creates conflict between honest and dishonest taxpayers, he said.
There are many influential people … such facilities might have been given due to their influence and that is not right, he said.
The government should rather rationalise the corporate tax and gradually reduce the existing tax-policy anomalies, like tax exemptions and multiple tax rates. This would increase tax collection, he said.
However, former NBR chairman Muhammad Abdul Mazid said exchanges through hundi (an illegal channel of sending and receiving money) is closed due to the pandemic and that was the reason many legalised their undisclosed assets and money.
Regarding the economic benefit of such a step, he said this money was in the private sector and it remains in the private sector.
The government even got less tax in this way as the tax rate was only 10 percent, he said.
Had such legalisation opportunities were given for setting up makeshift hospitals or any project for creating employment for those who lost jobs during the pandemic, it would have been logical, he said.
All three experts said such opportunity for legalising undisclosed assets was not logical economically or morally and that such scopes should not be given in the future.