Share brokers seek allowing black money investment at capital market to turn the corona hit bearish market a vibrant one.
In a written proposal the brokers advocated the theme to the Chairman of the National Board of Revenue (NBR) requesting him to continue the facility from next fiscal
“In order to pump liquidity into the stock market, it is necessary to give investment opportunity to undisclosed money. “Md. Rakibur Rahman, Director of Dhaka Stock Exchange said. Capital market has been going through a very bad time for a long time, he said adding that in the meantime, the stock market has become more upset riding on the back of the coronavirus and lockdown.
Bangladesh Capital Market Investors Unity Council, a new forum to protect rights of small investors also demanded that black money be given the opportunity to invest in the stock market. The organization, however, like to see investment black money in the stock market for the next 5 years.
Accoring to the officials working with the issue at National Board of Revenue (NBR), two proposals are being examined to whiten black money. Firstly, if the money earned illegally with 5-10 percent tax is declared, no question will be asked. And secondly, money invested in bonds will be blocked for 3 years. That bond must be transferable through the exchange.
A working paper of the International Monetary Fund (IMF), prepared by Leandro Medina and Friedrich Schneider, showed that the size of shadow or black economy in Bangladesh thus stood at around US$58 billion or at least Tk 4532.71 billion in 2015.
“One is legally earned income but undisclosed for some reasons. Another is illegally earned income. Those who earned through illegal and criminal activities like smuggling and rent seeking have no scope to declare such incomes. There is also no legal provision to do so.,” a senior economic journalist analyzed.
“Black money holders are not sitting idle with their undisclosed incomes. They have parked major portion of it in different places in forms of investment and also spent on consumption. Be it in the country or outside, black money has already been invested in different financial instruments, stock market, real estate and other ventures. In this way, black money has already entered into the formal economy. “ he further exalined.
Many believe that the proposed money whitening scheme is quite unethical as it encourages black money and discourages honest tax payers. It will also distort morals of society in the long run.
But the most critical message from the proposed money whitening scheme is that there is a surge in black money in the country mainly due to rise in cronyism and rent seeking. Over the years, rent seeking has become a booming business thanks to lack of transparency and accountability in different development activities.