Former Dhaka University professor and economist Dr Wahiduddin Mahmud has raised an important point by asking, “Why do all those who have land or flat in Dhaka city own black money?”
He pointed out the matter and also presented his opinion in a Facebook post on Sunday.
In his post, the economist said according to the newspaper, the finance minister has recently commented that all those who have land or flats in Dhaka city own black money. By black money, he meant the "undisclosed" income of income tax returns, and gave examples of elite areas, especially Gulshan-Banani.
Surprisingly, there was no discussion about such an important comment. The Association of Developer Companies (REHAB) has demanded a reduction in the registration fee for the sale of flats in response to the budget, but has not commented on the matter.
It is known that there is a tendency for massive tax evasion in the country. But the finance minister made the remarks citing inconsistency in the existing legal process of buying and selling land or flats. The government has set a price for the transfer of land or flats in different regions (according to the size of the land or flats).
The finance minister has rightly said that the actual price for the Gulshan area is five to six times higher than the fixed price. Therefore, the person who is selling at that price will not be able to show the legitimate source of income from the sale to the income tax authorities (even if it is shown as "other income", he will have to pay tax at a much higher rate) and therefore remain undisclosed.
According to the finance minister, black money is being made from the inconsistency of the law. However, he has probably inadvertently convicted everyone with misinformation.
The price fixed for the registration of the sale is not the maximum, but the minimum, so that at least on this price all the registration fees including income tax at source are collected. But there is no obstacle to registering by showing the actual price many times more than that.
And many people who are renting land in these areas by constructing apartment buildings through developer companies after getting an allotment of land from the government, are also not supposed to own black money in this way if they do not sell the apartments.
However, the finance minister has identified the problem. Even if an ethical taxpayer wants to register the sale of the flat by showing the actual price, it is difficult to find a buyer who is interested in showing the price. There is a high registration fee, but buyers who have a legitimate or "displayed" income to pay that price are often not found. That is also the correct guess of the finance minister.
But the solution to the problem is not difficult. Based on the data obtained from the survey, the minimum price for periodic registration can be determined at least a little more realistically based on the actual market price per square foot of land and flats depending on the area.
If the developer has to comply with the demands of the companies at the expense of revenue, then the rate of registration fees has to be reduced in proportion to the sale price (a few years ago this fee was reduced a lot in the face of demand). But there must not be a law that automatically creates black money and forces honest taxpayers to own black money.
However, it is most desirable that both the buyer and the seller be willing to show real value. Not everything is done by law, these are matters of social values and attitudes.