Is it good to allow Black Money to be whiten by investing in Stock?

[Little Mouse]

I don't understand what "whitening black money" means, OP.  

I should have shared a link in the OP. Black money simply refers to the undisclosed income. That can be legal or illegal source although I would call all the sources illegal.
And for this black money to be whiten, govt is asking 25% fee if this money is invested in the stock. Previously the rate was 10% only.
You may also learn from here- https://www.thedailystar.net/business/economy/stock/news/tax-raised-25-investment-black-money-stocks-2120645

[wxa7115]

I don't understand what "whitening black money" means, OP.  True, I don't watch the news all that much, but I don't think I would have heard about this at any rate.  Can you explain?  Also, when starting a thread like this a link would be useful for readers who either don't understand what's being discussed (like me) or would like to verify the facts for themselves.

None of the replies so far give a clue as to what "black money" is.

Black money is basically money earned legally or illegally, but not declared to the government agencies, so whitening probably means paying the taxes i assume, if you are earning money from crypto i don't think that the government will have any way of tracking that, and paying 25% is a really high rate, so the people that didn't pay the taxes don't think that will do it now, this is a very stupid move by the government, they should be reducing it to encourage paying taxes.

Agreed, this is something that is a mistake, besides they mix two different concepts in one which is yet another mistake, if someone got money legally but simply decided to not pay taxes then that is one thing, but money obtained through illegal means like selling drugs and other crimes should never be allowed to be made legal and yet this is precisely what they are encouraging.

And then if that was not enough they have the bright idea to charge a 25% tax for the privilege, which is something most of those people will refuse to pay, after all if they already made the effort to avoid being taxed on their earnings why would they accept such a high tax now?

[el kaka22]

Depends on the nations growth. If we are talking about a small nation then if you can take the dark money and put it in stocks that will make the companies richer and grow bigger and that helps the nation a ton, we need companies to grow bigger and bigger and be global brands in order to help that nation, any poor nation with one huge company that sells in tens of billions to world would be benefiting from that and growing out of a poverty nation to a developing nation thanks to that.

However if you are already a big nation then I doubt that you would "need" that, only would allow that to happen because well money is money and who says no to money so they still take it even though they do not need it, it's called greed. Which is why there is really no way to stop this, dark money will find its way into pockets of rich people to launder one way or another.

[just_Alice]

Looks like a sound idea. Obviously, people that run businesses underground will continue to do so, so there's no stopping them, it's basically very similar to legalizing a gambling business. However, it is no secret that for such entrepreneurs withdrawing and using money they make from the black market is a big problem.

Such terms will encourage these people to unravel their true income, because even with 25% still, it will probably be more convenient, less risky, and maybe even cheaper than money laundering. At the same time, black money is most often pretty big money, so this will be a good profit for the government.

Of course, there should be some limits, certain types of businesses shouldn't run under any circumstances, no matter how much money the government can get from it.

[mu_enrico]

It sounds like a legalized money laundering scheme by a corrupt government. However, this scheme is well-known tax amnesty type:

On the other hand, there are some tax amnesty schemes which provide legal amnesty as well. This means that these schemes basically promise that the government will simply close their eyes to the source of the taxable income as well. The government promises to not conduct any investigation or disclose any information after they receive the tax revenue, which is due to them.

Source

I think it will reward criminals, corrupt politicians, etc., where they should be punished. Sure it will boost the government revenue but I don't think this type of tax amnesty is ethical. I prefer the other tax amnesty type where it simply waives penalty from tax evasion.

[Sithara007]

It sounds like a legalized money laundering scheme by a corrupt government. However, this scheme is well-known tax amnesty type

Bangladesh is not the first country to bring such an amnesty scheme. A few years back, there was a successful amnesty scheme in India, which brought billions of USD to the treasury. But one drawback is that criminals may use this opportunity to legalize the funds they earned through illegal means - such as robbery, ransom, corruption.etc. The government knows that at least some of the funds may be of dubious origin. But when they are desperate for funds, they just ignore these hard facts.

[Lorence.xD]

No it's not, the taxes that the money launderers are evading is just far too big to let it pass by. Plus it also contributes to the global problem of financial crimes, look at Panama Papers. This bill that Bangladesh is planning to implement is going to be a toleration of money laundering and it will stimulate money launderers around the world.

[paxmao]

Recently, I have read an update of the budget of Bangladesh where a bill of increasing (25% now) the rate for whitening black money has been passed. According to that, one can whiten their black money by investing in stock market and they have to pay 25% fee to the government. Before this year, the rate was 10%.
Is it healthy for the economy? May be it’s healthy but it’s encouraging corruption. Is there any other country which allows such investment too?
Learn more- https://www.thedailystar.net/business/economy/stock/news/tax-raised-25-investment-black-money-stocks-2120645

This looks like a permanent fiscal amnesty. There was one in Spain not too long ago, because the government was desperate for funds so they were willing to ignore the tax evasion penalties and charges as long as the money was brought to light and paid the right level of tax.

However, there is a big difference between a one-off and a permanent mechanism for money laundering. Also, even if the money is legalised, there should be some questions about where did it come from, that is, is not the same money coming from drug selling that money paid "in hand" with no records for selling a house or other stuff or even an undeclared inheritance.

[Kittygalore]

If you want to have more drugs, violence, tax evaders and general blood money on the streets then probably it's alright for you to allow dirty money to be cleaned because that's where those money likely come from. There's no good coming out of this Bangladesh legislation to make dirty money clean no matter which angle you are looking at it.

[lixer]

Looks like a sound idea. Obviously, people that run businesses underground will continue to do so, so there's no stopping them, it's basically very similar to legalizing a gambling business. However, it is no secret that for such entrepreneurs withdrawing and using money they make from the black market is a big problem.

Such terms will encourage these people to unravel their true income, because even with 25% still, it will probably be more convenient, less risky, and maybe even cheaper than money laundering. At the same time, black money is most often pretty big money, so this will be a good profit for the government.

Of course, there should be some limits, certain types of businesses shouldn't run under any circumstances, no matter how much money the government can get from it.

The problem is not to get those dark money into legalized way so that the world could use it, its about encouraging it. Sure there is no way that we can ever stop bad people doing bad stuff, ever since the start of humanity there were bad people so we will continue to have it until the day humanity is fully gone as well. However what I do not understand is that why would we do something that would be encouraging them to continue to do what they do.

We should try to make it as hard for them as possible so that the bad people who are bad at being bad would get caught and they would be jailed, the really big bad ones will already grease the hands of some politicians and be fine anyway, so we should not be really making it easy for all the bad people to just launder their money. Which is why I think this is a bad idea, just ban all the dark money going into anything.

[ILuckyGuyI]

I think that it is definitely not healthy for the country. Because as you indicated, it motivates the corruption. In the place where corruption exists and increases, that place is just dead already. Corruption is one of the worst things can happen to a country. It starts making the country poor also.

[amishmanish]

The problem is not to get those dark money into legalized way so that the world could use it, its about encouraging it. Sure there is no way that we can ever stop bad people doing bad stuff, ever since the start of humanity there were bad people so we will continue to have it until the day humanity is fully gone as well. However what I do not understand is that why would we do something that would be encouraging them to continue to do what they do.

We should try to make it as hard for them as possible so that the bad people who are bad at being bad would get caught and they would be jailed, the really big bad ones will already grease the hands of some politicians and be fine anyway, so we should not be really making it easy for all the bad people to just launder their money. Which is why I think this is a bad idea, just ban all the dark money going into anything.

The government's aim is to basically get more people under the umbrella of the tax-paying formal economy. In developing countries, it is a possibility that people tend to earn money in illegal, not necessarily evil ways. This can be because they don't have the understanding to setup a business with all the legal and taxation compliance. Over time, as they start earning more, it become obvious that maintaining cash payments and just a manual system of collections and payments saves them from tax too.

I think such amnesty schemes can be the precursor to such businesses having an opportunity to come to the mainstream. Though, what is required is that it should be accompanied with some sort of a warning for an "audit" on those who choose not to exercise such an option. This is only from the governments point of view.

From the viewpoint of a lot of individuals, paying tax itself may not be agreeable to them. For example, if you pay tax on your fixed salary, why should you part with tax when you earn something extra from hustling or being part of an online economy? This is why it is not so straight-forward to categorize everyone having "Black Money" as evil, corrupt and unworthy of any form of recourse and redemption.

[so98nn]

Country like Bangladesh, well it is straight away bad idea for such country because they themselves don’t have enough funding options to run the government in proper fashion. I have seen Bangladesh and the capital that is Dhaka. They are trying to be overpower but they have failed many times due to poor business standards and low quality of import export regulations.

In such country it’s worst idea to even have black money your pockets. Because that’s what making the country poor over the time. These things can disturb ongoing banking systems wildly and they are affecting no matter what.

[SquallLeonhart]

Country like Bangladesh, well it is straight away bad idea for such country because they themselves don’t have enough funding options to run the government in proper fashion. I have seen Bangladesh and the capital that is Dhaka. They are trying to be overpower but they have failed many times due to poor business standards and low quality of import export regulations.

In such country it’s worst idea to even have black money your pockets. Because that’s what making the country poor over the time. These things can disturb ongoing banking systems wildly and they are affecting no matter what.

On contrary I believe that is even better when you are a very poor nation. Why? Because that means as a poor nation you can host all the world's biggest criminals (only accept amounts over 100 million for example) and this could be people who are truly bad like drug dealers and mafia boss and so forth, or you could go very easy taxes on big companies like amazon or facebook or stuff like that and it would allow you to become tax havens for those nations as well.

There are tons of nations that allow these huge nations to have "headquarters" there which we all know their head quarters are in silicon valley but they just call it "one of their offices" and then plant their fake headquarters in panama or Bahama or Ireland or someplace like that. A country like Bangladesh should get as much money into the nation as they can without looking where that money comes from, just so they can get a bit of that money.

[maxreish]

Isnt too huge to add up tax as 25% from your earnings from black money? I mean, it could be a help to improve their own economy but the people behind the whiten money will suffer. Will this way of putting tax from black money to whiten be fair enough?

They should look more deep about this one, as they have lessen it down to 10% and they allow to invest their money to stocks? At some point, it will give a good outcome for both government and the client.

[jossiel]

Your government is just on it for the money, for the tax and they wouldn't mind where the money will be coming from as long as it's invested in stocks and they have to pay for the tax.

That's the process that they've made and I think there will be a lot of money that they can collect from that process as if they're allowing those 'black' money or coming from illegal(?) I guess.

[yhiaali3]

Unfortunately, Bangladesh is ranked at the top of the list of the most corrupt countries in the world. Most of this black money is stolen from the people, and the corrupt government launders it in exchange for fraudulently taking a percentage of the money. In other words, they participate in stealing the people’s money and remain silent about it in exchange for a bribe they take, which they call a “tax”! !! This is corruption. You can do all the illegal things like drug and weapons trade, selling human organs, bribery and theft and then you can make this dirty money legal by putting it on the stock exchange and giving 25% as a bribe to the government!!!
 Money laundering in this way is not only harmful to the health of the national economy but is also destructive for the whole country.

[ten seventy]

Investing money to stock market still not a guarantee to earn because risk is there and it only will becoming good if only the investement will be successful. However, investing in a certain projects own and manage by you would be prefer than letting you entrust your money to someone like in those stock market. It would not be a good idea in my opinion.

[Obito]

it seems that the government in your country only wants to get income for the state, thus raising taxes, but unfortunately this has a bad impact on the country's economy, because state revenues will be smaller than illegal money from corruptors, I think this regulation actually supports officials to do corruption

Of course it has a bad impact, laundering the money successfully means that the lives that was harmed or taken making those money will not see justice because the money got cleaned with all it's blood like no one was hurt. Laundering is never a good thing because it makes life unfair because they don't pay their dues to the community through taxes and fighting to survive fairly.

[Vishnu.Reang]

Of course it has a bad impact, laundering the money successfully means that the lives that was harmed or taken making those money will not see justice because the money got cleaned with all it's blood like no one was hurt. Laundering is never a good thing because it makes life unfair because they don't pay their dues to the community through taxes and fighting to survive fairly.

I agree these points, to some extent. It is true that money laundering mostly results from corruption and other illegal activities (including crime). When the government is announcing amnesty, in effect it is making sure that the perpetrators of these crimes will be never brought to justice. But at some point of time, a balance needs to be made. The crimes were committed many years ago. If the amnesty is not there, then the funds will remain stuck, or they will flow out of the country. There are two benefits from the amnesty - the government will receive a large fraction of the funds as penalty, and the removing amount will be injected back in to the legal economy.