No more money whitening scope
Finance Minister AMA Muhith has once again said the upcoming budget would not offer any opportunity to legalise black money.
"I tell you that the provision is cancelled from today," he said at a crowded post-budget press conference yesterday in the capital's Osmani Memorial Auditorium.
At several pre-budget discussions over the last one month, Muhith repeatedly spoke of scrapping the provision for whitening black money in the budget for fiscal 2014-15.
However, in Thursday's budget speech in parliament, the minister didn't touch on the issue. He neither said anything about it nor did he include in the money bill any proposal for scrapping the provision.
When reporters raised the issue repeatedly, Muhith yesterday said the government offered the opportunity to legalise undisclosed money in three sectors, including “stockmarket” and housing.
“Tk 34 crore has been whitened in the current fiscal year. From that point of view, there is no black money in the country.”
There would be no scope for whitening black money in the upcoming budget though the issue was not mentioned in Thursday's budget speech, said the minister.
“We will incorporate it [in the budget].”
The minister mistakenly mentioned stockmarket as one of the sectors enjoying the scope for whitening black money. When reporters pointed out the mistake, he referred the issue to Ghulam Hussain, chairman of the National Board of Revenue.
Hussain said the provision is now applicable to real estate, investments in treasury bills and individuals paying normal tax on undisclosed income and a penalty of 10 percent.
"There is no such scope for stockmarket," said the NBR chairman. "As mentioned by the minister, the provision for the existing sectors will go. But we will have to introduce a bill in parliament on the issue by June 30."
Muhith referred to land as the biggest source for investment of black money. There is a huge difference between the registered price of land and its real price.
"This is how the major portion of black money is generated," said the minister.
"We have to think how we can stop generation of black money. But we have not progressed much on the issue."
He said the finance ministry would conduct a study to know the extent of black money in the country and how it is generated. The ministry will also recommend steps for containing generation of black money.
Barring a few exceptions, the scope for legalising black money was given, in one form or the other, in every budget.
Between fiscal 1971-72 and fiscal 2012-13, about Tk 13,808 crore was whitened. During the period, the NBR received taxes of Tk 1,455 crore, which is less than 1 percent of the revenue collection target for fiscal 2014-15.
Muhith yesterday admitted that the budget was ambitious.
"From the very beginning, the government has been rolling out ambitious budgets. We have also implemented those. High ambition is good for the country," he said.
"The achievement has been excellent from the very first year. That is why our ability to spend has doubled over the last five years -- a thing that could not be seen in 10 years [before 2009]."
"This is the character of the government. High ambition always succeeds. I have no intention to be miser when it comes to successful high ambition."
Except for the current fiscal year marred by deadly violence, there was only a tiny gap between the budget size and actual achievement, said the minister.
Justifying the proposed tax measures regarding gold, he said the government should have taken such measures in the past. "It is a good source for collecting revenue. We should use this source."
"When the NBR told us about the potential source for revenue generation, I told them why haven't you told me about this in the past? Where have you been? … It will continue. Everybody should support it."
On the Centre for Policy Dialogue's doubt about BBS' calculation of 6.12 percent growth in the outgoing fiscal year, Muhith said it was unjust and totally unacceptable.
"The BBS independently calculates the GDP. We don't interfere in the matter."
"I strongly refute such stupid allegation," he said.
On foreign aid, the minister said the government can't use foreign aid offered in a single year. "The unused part is accumulated in the pipeline.
"It becomes worrying when the pipeline gets bigger. About $19 billion of foreign aid has piled up in the pipeline. It was $9 billion five years ago."
He said one of the reasons behind this was the increase in commitments over the last few years. “We have to take special initiatives to utilise unused funds."
Muhith expressed satisfaction at the opposition party's presence while he was unveiling the budget in parliament. The opposition was present in parliament. It didn't matter in what form, he said.
In reply to a query, he said there would always be crimes in society. "It doesn't mean that you will patronise them. Every individual should protest wrongdoings; otherwise the society will be destroyed."
He said the Pay and Services Commission, which is to recommend a new salary structure for civil servants, will submit its report to the government by December this year. "We will act accordingly."
On the risk of relying too much on the banking system to implement the budget, Muhith said the government never borrowed heavily from banks in the last six years.
The Awami League-led government set a target of five percent deficit of the GDP every year, and it didn't go beyond 4.5 or 4.6 percent, he said.
Muhith said repeated rise in the limit of tax-free income is not seen in any other country, not even in the US where the ceiling has not changed in the last one decade.
"We wanted to do the same. But the prime minister didn't consent to it … Otherwise, I would have announced that TK 220,000 or Tk 250,000 would be the limit of tax-free income for the next 10 years."
On the agriculture sector, he said, “We have given all incentives needed for the sector." Whenever the sector faces any problem the government gives utmost importance to it.
Agreeing with him, Agriculture Minister Matia Chowdhury said. "We have got whatever allocation we wanted."
"We are also getting assistance from the finance minister in many new areas," she said.
Information Minister Hasanul Haq Inu said the ambitious target for revenue generation and the ADP is realistic.
Planning Minister M Mustafa Kamal said, "The way we have implemented the budget in the last five years, we will be able to do the same in the next fiscal year."
Abdul Mannan, state minister for finance, said people have accepted the present government. "The situation is normal in the country."
Bangladesh Bank Governor Atiur Rahman said the central bank is following a prudent monetary policy to contain inflation in the next fiscal year.
On Thursday, Muhith announced the Tk 250,506 crore budget for 2014-15, which is 18.5 percent of the country's gross domestic product.