Concerted government efforts backed by political will are required to prevent money laundering and bringing discipline in the financial sector, Professor Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), has said.
“Without political accountability and proper policy guidance, no government institutions can act independently against irregularities like money laundering, loan default, and tax evasion,” he said at a programme on Saturday.
He was delivering the chief guest’s speech at a shadow parliament debate on “Political Accountability in Prevention of Money Laundering” organised by the Debate for Democracy at Bangladesh Film Development Corporation (BFDC) auditorium in the city’s Tejgaon area.
Teams from two universities – Northern University Bangladesh and Primeasia University participated in the debate moderated by Debate for Democracy chairman Hassan Ahamed Chowdhury Kiron.
Following conclusion of the debate, Mr Rahman said two types of money were being siphoned off from the country – firstly, the money earned through graft and irregularities, and secondly, taxable but undisclosed or black money.
The tax-GDP ratio in the country was hovering around 11 per cent which indicated that a huge amount of undisclosed money existed in the country, he said.
Besides, the continuous money whitening facility for tax evaders had been discouraging honest taxpayers to pay their taxes as the scope created a disparity in taxation.
“For example, honest taxpayers, who pay up to 33 per cent income tax, observe that tax evaders can whiten black money investing in real estate without any question by paying only 10 per cent penalty.
Such practice in the country disheartens good taxpayers while studies showed that the black money whitening facility had not that much impact on increasing tax collection,” Mr Rahman said.
The country’s development would be accelerated if the undisclosed money got recycled instead of being laundered abroad,” he said.
The CPD distinguished fellow also said the National Board of Revenue (NBR) should be strengthened further to prevent over and under-invoicing in export and import as over 80 per cent of the money laundering was trade-based.
He also called for strengthening the Transfer Pricing Cell (TPC) under the revenue authority to firmly regulate cross-border transactions done by multi-national companies (MNCs) in the country.
The TPC was established in 2014 after formulation of a TP law in 2012 by the NBR to check tax evasion by MNCs but the cell had not been that effective yet, he said.
Referring to the sluggish flow of foreign direct investments (FDIs) in the country, he said higher corporate tax rate compared to those in neighbouring economies discouraged investors to come to Bangladesh.
There remained scope of reducing corporate tax rate to attract more FDIs for economic expansion of the country, he opined.
Besides, he called for establishing an independent banking commission to bring discipline in the banking sector which was ailing with huge non-performing loans (NPLs).
NPLs in the country’s banking sector reached about 11 per cent, he said adding a large portion of the defaulted money was prone to be laundered out of the country.
The Debate for Democracy chairman said despite different initiatives taken by the government and its anti-graft agency, political commitment was required to curb corruption in the country.
Placing a 10-point recommendation to prevent money laundering, Mr Kiron said the Money Laundering Prevention Act, 2012 should be amended to try money launderers by establishing a special tribunal.
Legal barriers should be removed to disclose names and addresses of money launderers while the Election Commission (EC) should take initiatives so that they do not get nomination in elections, he said.
He also called for disclosing names of individuals who built houses abroad through corruption and money laundering.
In the contest, Northern University Bangladesh (NUB) represented the government side while Primeasia University represented the opposition party to win the debate.