No Whitening of Black Money, We Want an Accountability-based Budget

In Bangladesh’s budget discussions, one issue repeatedly returns: the opportunity to whiten black money. Almost every few years, a system is introduced that allows undeclared income to be legalised under certain tax payments or conditions. The government argues that this brings idle money back into the economy, increases investment and raises revenue. However, in reality, it weakens ethics and tax discipline.
A state becomes strong only when the law is applied equally to all. But when a regular taxpayer pays full taxes while another person evading taxes gets special facilities to legalise that money, the state effectively encourages dishonesty. This sends a wrong message to society: dishonesty is more profitable than honesty.
This policy is not only economic; it is a question of justice and morality. Due to its repeated use over the years, there is an increasing risk that tax evasion and illegal income generation will rise further. At the same time, honest taxpayers feel deprived, as they bear a relatively higher tax burden. Therefore, in the 2026-27 fiscal budget, this opportunity should be abolished so that the state clearly signals there will be no compromise with corruption and tax evasion.

The government’s argument has been that this opportunity brings undeclared money into the economy and increases revenue. In Bangladesh, the practice of whitening black money began after independence, with the first major opportunity introduced in 1975. Since then, different governments have provided this facility at least 17 times, often arguing that it would bring undeclared money into the economy, boost investment, and increase revenue, but no lasting positive impact has been observed. In 2007-08 and 2008-09, about 32,558 individuals and institutions legalised roughly Tk96.83 billion, yet tax evasion continued. During 2020-21, amid COVID-19, black money was whitened at a 10% tax rate without scrutiny, resulting in around Tk205 billion being legalised by 11,839 participants and generating Tk20.64 billion in revenue. However, when tax rates increased the following year, participation dropped sharply to 2,300 in 2021-22, indicating that tax concessions, not real economic contribution, were the main incentive. Even, international experience shows that although short-term revenue may increase, in most cases the long-term effects are negative, though Indonesia’s 2016 tax amnesty programme is considered relatively successful due to strict monitoring and strong post-amnesty enforcement. However, experts argue that the real success came from strict post-policy enforcement.

Currently, many countries are moving away from this policy and focusing instead on strengthening tax administration, digital monitoring and anti-money laundering systems. International organisations such as Organisation for Economic Co-operation and Development (OECD) and the Financial Action Task Force also emphasise transparent financial systems, as whitening black money facilitates corruption and money laundering and damages a country’s image.

According to various studies, despite repeated opportunities, the size of the black economy in Bangladesh has not significantly decreased. In many cases, it is believed to have increased. The biggest problem is that this policy has sent a wrong message to society: tax evasion will eventually be legalised. Therefore, many begin to believe that even if they avoid taxes today, they can legalise it later at a lower cost. Thus, tax evasion transforms from a risky offence into a profitable strategy, weakening the revenue structure. Another major issue is that legalised money is rarely invested in productive sectors; instead, it is invested in land and real estate. This does not create employment or industrial growth but instead increases property prices, putting pressure on ordinary citizens.

From an Islamic perspective as well, this is against justice. The Qur’an prohibits the unlawful consumption of wealth. Such policies indirectly legitimise unjust earnings, which is not morally acceptable. This creates moral confusion among the younger generation and strengthens a “managed system” culture. The biggest risk is that it institutionalises corruption. People know that even if they are caught, there will get opportunities for legalisation of their black money. This reduces fear of corruption and increases illegal wealth accumulation. It also affects the business environment. Tax evaders gain competitive advantage by having extra capital, allowing them to sell at lower prices, while honest businesses fall behind. Gradually, transparency is replaced by opacity in the market. 

Although this policy is an internal matter, it has international implications. A country’s transparency and accountability are crucial for foreign investor confidence. Bangladesh is already under international scrutiny regarding money laundering and capital flight. In such a situation, this policy can weaken foreign investment confidence.

The solution is to permanently abolish the opportunity to whiten black money and build a transparent tax system where no such special privileges exist in the future. This will reduce incentives for tax evasion. At the same time, the tax system must be simplified and made harassment-free to encourage voluntary compliance. Anti-corruption institutions must be strengthened and made independent, and strict action must be taken against major tax evaders. Monitoring of large transactions and asset acquisitions must also be strengthened. Most importantly, political will is essential. Laws must be applied equally to all. Only then can a transparent and just economic system be established.
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The writer is an economist, researcher and columnist. He can be reached at [email protected]