Opinions
6 years ago

Encouraging capital flight?    

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There was a time when businesses were far more open in putting the blame of loan default on lengthy process and graft. The essence of the argument was that the 'cost' of such, meant the loan was destined to turn 'bad' thereby defeating its very purpose. At the time, even today, no one appears bothered why such loans are taken to begin with. The simple mathematics relating to cost of loans added with utilisation cost, wages, perks, estimated income from employing these funds, profits, taxes etc., would appear not to play out.

It isn't impossible for governments to keep track of illegal transfer of money. Government-to-government (G2G) dialogue has helped resolve thorny issues such as double taxation between countries. That the scourge in the country continues is another issue — clearly designed and deliberately maintained. Information shared about visa applicants and funding of education and medical expenses, if shared allows for probes not just into income sources but also outflow sources. It's all very 'in the face'. Embassies and High Commissions demand so much information, especially how cost during travel will be met. But money transfer processes remain out of the ambit. Classified advertisements promising 'guaranteed' visas and visible shop signs suggest this is a booming business.

The second home, citizenship offers, nowadays publicly announced, is a sort of thumb in the eye. Consul Generals-sent emails offering citizenship against investments are increasing. Neither the government nor the offices of such Consul Generals talk of legal money transfer process. Essentially such processes do not exist. And while international efforts to curb terrorist funding is supposedly on, few actual processes doing that have been identified or acted upon. Thailand is the latest country to offer residency in terms of long-term visas against whopping investments. Malaysia has been doing it for years and though the number of those who took up such offers is relatively low, they exist and are on the up. Some of these bare necessities facilitated by active, functioning offices never seem to get the customary visit by revenue and law enforcement agencies.

In terms of monetary value the amounts may seem insignificant as opposed to the massive bad loans. It doesn't help when even relatively smaller sums are added to the large ones. The disappointing fact is that until now all those purported 'terrorist funding' channels in Bangladesh have never been publicly declared. Islami Bank did have fingers pointed at it but Asian reviews said it was one of the best managed banks and since the surreptitious change in ownership, not a word has been said or incidents of such funding identified.

In spite of revenue targets to be reviewed downwards by around Tk 300 billion (30,000 crore), the taxman is considering reducing the lowest tax slab to 5.0 per cent and keeping the ceiling untouched. That will encourage more to pay tax, but could get very complicated if the bottom threshold changes. If these Consul Generals are included in the net as entities rather than individuals, income tax has to be applied for such value addition service.

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