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

[Little Mouse]

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

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[bocyaj]

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?

Actually the country like bangladesh, pakistan, Nigeria. The corruption was huge in manner. Because the money flow in the economy was an unregulated one. So the corruption and black money was huge in small country. It will be the good place for the cryptocurrency investments.

[Coyster]

The thing is the government is only concerned about the rate of the tax that'll be paid to them and not the consequences in terms of fraudulent/corrupt money that'll be made legal through this means. Imo, countries that will operate via this policy will really be corrupt ones whose governments steal from it's people. This sort of policy may also have been created purposely to be productive/favor the rich, capitalists and high ranking officials of the government who make their wealth through fraudulent means, cause they'd definitely also use this medium to legalize huge amounts of their stolen funds basically by paying a certain amount of tax to the government.

[The Sceptical Chymist]

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.

Edit:  Shenzou and Coyster, I appreciate your clarification.  I could have looked it up myself, of course, but I was looking for someone to give me the answer so I could merit them appropriately (which I think I did).  I guess it's a term that isn't used in the US, though from what you two posted, there's plenty of "black money" here, no matter what it's called.

[Shenzou]

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.

[Coyster]

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

It's actually not a popular concept, but from the little I understand, I'd try to make it somewhat understandable, this is best excerpt I could surf on the internet on what black money actually means:

What is black money? The National Board of Revenue(NBR) defines it as any legally or illegally earned money which is not declared to the government agency, and on which no income tax is paid to the government. This definition tends to dilute the seriousness of the matter, because it minimizes the importance of the concept of illegally obtained money or unearned income or money amassed through immoral, improper and illegitimate means. Black money is linked to corruption, crime, illegal activities and the black economy. A perhaps more accurate description of black money revolves around the concept of money illegally obtained through political and/or bureaucratic corruption, bribery at all levels of the government, semi-government, autonomous or semi-autonomous offices or organizations, as well as money amassed by business people through smuggling, black marketing, shady deals, profiteering, money amassed by labour leaders, student leaders, through extortion – and especially, money amassed by functionaries of the ruling government party and its various organs, and their families, relatives and cronies.

So based on the foregoing and the explanation of what black money actually is above, "whitening black money" means declaring such assets to the government, making them aware of it, but the source and legitimacy of such funds would not be questioned cause the owners will be charged a certain percentage in tax, so it basically just works like this: you make known money the government has no idea of, money they have previously charged no tax on, you then pay tax on them, integrating it back into the normal, everyday, "white" economy, this act to an extent frees you of criminal charges and the rest. Thus that's why my earlier post criticizes such scheme, as I believe it just favors the criminal-minded government and some of its capitalist organizations to keep embezzling money and getting away with it.

[Hydrogen]

Is it healthy for the economy?

There is an open question of whether stock markets are valid indicators for gauging economic strength. Some say a strong stock market indicates job growth and stability. While detractors claim capital thrown at stocks to raise the market, fail to trickle down to middle class and lower earners.

As is usually the case, the truth could reside somewhere in the middle of both extremes.

Investing black money in stocks could give the private sector funds to grow, hire more workers and elevate standard of living. Or black money invested in stocks, could go towards funding CEO multi million dollar bonuses and private jets. Without the funds trickling down to normal people. It all depends on the implementation and details.

[Darker45]

25% is quite high, although the government has the reason to impose such very high tax on black money entering the whitening process. In the first place, if the government is really bent on curbing illegally-accumulated wealth, such money could simply be confiscated rather than allowed to join the circulation of clean money. What the government is doing is a compromise. Syndicates should even be grateful for this. However, considering that it has grown from 10% to 25%, some illegal actors might find a way to avoid paying it altogether.

[Sithara007]

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?

Do you have any proof for this?

Every now and then, the governments announce amnesty for those with unaccounted funds, and in this case it seems to be a similar measure. Here in India, a few years back the government allowed individuals with unaccounted money to legalize them by paying the taxes (plus a small penalty). Here the top most tax bracket is 43%, and with penalty added, the deduction will account for a majority of the funds. And that is why I am quite surprised with the 10% figure that you had mentioned in your post. It is too low. So this 10% penalty is in addition to the tax liability?

[Xinarae*]

25% is too much to increase the tax rate the current budget provides special opportunities to bring black money into the mainstream economy. The government can have the opportunity to launder black money the tax rate may increase if someone makes a brand new investment they can get a chance to launder black money with only 10 percent tax. New investments have stalled due to corona the government faces the challenge of increasing revenue collection and creating employment overall, policymakers have agreed to have a special opportunity to launder black money.

[zanezane]

So they are now basically tolerating money laundering because that's what vibe I am getting at this black money turning into white money. If this is going to happen, a lot of money launderers will flock to Bangladesh and they will clean their money there.

25% is too much to increase the tax rate the current budget provides special opportunities to bring black money into the mainstream economy. The government can have the opportunity to launder black money the tax rate may increase if someone makes a brand new investment they can get a chance to launder black money with only 10 percent tax. New investments have stalled due to corona the government faces the challenge of increasing revenue collection and creating employment overall, policymakers have agreed to have a special opportunity to launder black money.

This law for taxation shouldn't even exist in the first place because this is all bullshit, it's basically a blatant money laundering and this doesn't even help a lot with the current rampancy of money laundering around the world.

[Poker Player]

 There are times when governments do it as a way to bring money to the surface, because they need it, but I do not think it is good, because it encourages people not to declare their money in the future, thinking that there will always be an amnesty similar to this one. We should also think that with less taxes people would not hide so much money, so we would not reach the absurdity of putting high taxes, and when we see that people do not declare, having to make amnesties of this type.

[davis196]

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?

What do you mean by "black money to be whiten"?Do you mean money laundering?
I've never seen a country that allows money laundering,if the launderer pays a fee.This is ridiculous.
Normal countries will try to catch the criminals and confiscate all their dirty money.I guess that the government of Bangladesh can't handle the levels of crime and corruption,which are conducted inside the country.
That 25% fee seems pretty high.The criminals will choose to launder their money somewhere else and pay lower fees.

[bittraffic]

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.

How do they know the black money increased up to 25% if it weren't declared?  Are these the ones we call blood money too?

I'm not sure if it's going to whiten the black money by investing in the stock market as far as I know the brokers will still ask the sources of funds. It has to be laundered first for it to come out clean that's how it can be taxable and when ready for spending.

[Gozie51]

Black money is actually money surreptitiously made that isn't accountable to the government and such money because they are hidden money, they are not taxed. Perpetrators of such are always people who are in government or connected to the government. Corrupt government are always culprit of black money.

Are these the ones we call blood money too?

No, they are no where related if you are really serious on that concerning blood money.

Blood money, compensation paid by an offender (usually a murderer) or his kin group to the kin group of the victim. In many societies blood money functions to prevent the continuation of hostilities in the form of a feud

This explains a thing further on the blood money as being money paid to either placate bereaved family on the blood or death of their own.

Again in my own view, blood money apart from being a title of a movie in Nigeria depicting I'll gotten wealth from shielding of blood and killing, is money gotten from involving usually from  money made by spilling of human blood or "rituals"

[Coyster]

What do you mean by "black money to be whiten"?Do you mean money laundering?
I've never seen a country that allows money laundering,if the launderer pays a fee.This is ridiculous.

The meaning is in the first few replies in this thread, it's another form of money laundering i must say, but with a different term to make it not look as bad as it actually is, the thing is the government can claim that the money they are "whitening" isn't illegally gotten and that the owners have just basically not paid any previous tax nor declared their source, just to make the situation look good from their own side and that they are not accepting stolen money; but if we're to be honest with ourselves, majority of "black money" is acquired through illegal means and if you'll only have to pay a certain amount of tax to freely use and invest them, then it's a good bargain.

That 25% fee seems pretty high.The criminals will choose to launder their money somewhere else and pay lower fees.

I don't think it is, it looks fair to me, when you consider that the legitimacy of your funds wouldn't be questioned.

[dothebeats]

This means that the government favors stocks over any other investment, which is kinda off since criminals can still create opportunities for themselves by investing in stocks and just paying the 25% fee to get done with it. The companies who own the stocks will get their assets inflated for a short while until those with the "black" money decides to pull it out, and they basically just get their hands clean. The government is literally trying to help criminals here and I don't think that it's a good front.

[BIT-BENDER]

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?

I think it won't be long when the illegal money will be gotten from extorting the government and the economy themselves, and when this happens it won't be taking or reinvented into the economy but another different countries economy, I don't think illegal money should be condone regardless of the benefits the countries economy will have.
Form people's experience I can hardly think of an illegal money where someone, countries economy, companies and many more aren't the one being extorted from it.

[mckinleeanael07]

In my opinion black money is an illegal currency and there are individuals or organizations that take advantage of this market to launder money in an abusive way. and i personally feel it's not a good thing if we don't try to stop it, the crime will get worse and worse.

[bryant.coleman]

I don't think it's healthy to allow too much black money into the stock market. There will always be some black money in the market,completely eliminating is not an option. I would say that 10-15% is a healthier ratio than 25%. This might take a few years to get validated. Corruption is the most unproductive thing that can happen in a country. With a high level of corruption foreign investors will be reluctant to invest.

25% is the penalty for converting this black money in to white, and I don't think that it is excessive. In other countries, the penalty can be much higher. Here, the individual is avoiding jail term and a heavy financial penalty for tax evasion. So I would say that 25% penalty is going too lenient on those who break the law. But I guess that the government is in desperate need of funds and the stock market also needs a fresh injection of cash. So in a sense, I don't want to oppose this measure. If they don't allow the amnesty, then in all probability these funds will flow out of the country to some offshore tax haven.