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 legalized 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 legalize that money, the state effectively encourages dishonesty. This sends a wrong message to society-that 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. Bangladesh is now at a stage where accountability is as important as growth. 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.

“Whitening of black money” refers to a process where undeclared income is legalized by paying a specific tax or penalty. The government’s argument has been that this brings undeclared money into the economy and increases revenue. However, the major problem is that it indirectly encourages tax evasion. Those who pay taxes regularly remain in the same position, while those who evade taxes enjoy special benefits. This undermines fairness in the tax system and encourages people to view tax evasion not as a risk but as a beneficial strategy.

The policy of legalizing black money is not unique to Bangladesh; many countries have at different times offered opportunities to legalize undeclared assets or tax evasion. However, international experience from India, Indonesia, Italy, Argentina, Pakistan, and Nigeria have implemented black money whitening schemes shows that although short-term revenue may increase, in most cases the long-term effects are negative. Though, Indonesia’s 2016 tax amnesty program is considered relatively successful due to strict monitoring and strong post-amnesty enforcement, which resulted in some repatriation of funds and increased revenue. 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 organizations such as the OECD and the Financial Action Task Force also emphasize transparent financial systems, as whitening black money facilitates corruption and money laundering and damages a country’s image.

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 legalized roughly 96.83 billion taka, yet tax evasion continued. During 2020-21, amid COVID-19, black money was whitened at a 10% tax rate without scrutiny, resulting in around 205 billion taka being legalized by 11,839 participants and generating 20.64 billion taka 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.

According to various studies, despite repeated opportunities, the size of the black economy in Bangladesh has not significantly decreased (ICMAB). In many cases, it is believed to have increased. The biggest problem is that this policy has sent a wrong message to society-that tax evasion will eventually be legalized. As a result, tax morality has weakened, honest taxpayers have been discouraged, and the state has failed to build a sustainable revenue structure.

It is argued that it brings undeclared money into the mainstream economy and increases revenue. However, in reality, it provides only short-term gains while weakening the economy in the long run. But the core problem with this policy is that it undermines the foundation of a fair tax system. Citizens who pay taxes regularly contribute to national development, but when the state legalizes evaded money with minimal tax or penalty, tax morality is questioned. People begin to feel that there is no special benefit in following rules.

It also encourages future tax evasion. Many begin to believe that even if they avoid taxes today, they can legalize it later at a lower cost. Thus, tax evasion transforms from a risky offense into a profitable strategy, weakening the revenue structure. Bangladesh’s experience shows that despite repeated opportunities, the tax-to-GDP ratio has not significantly improved. This indicates that sustainable revenue growth has not been achieved, and the system has instead signaled that tax evasion is ultimately tolerated. Another major issue is that legalized 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 legitimize unjust earnings, which is not morally acceptable. The greatest harm of whitening black money is not economic but moral and social. It gradually changes societal values. When an honest citizen pays taxes regularly while a tax evader legalizes their wealth through special privileges, society receives the message that dishonesty is more rewarding. This creates moral confusion among the younger generation and strengthens a “managed system” culture.

Islam places great importance on justice and trustworthiness. The Qur’an emphasizes justice and warns against wrongdoing. The Prophet Muhammad (peace be upon him) strictly prohibited bribery and unethical transactions. Yet, the policy of whitening black money indirectly legitimizes such unethical gains. It also increases inequality, as benefits are mostly enjoyed by those with large undeclared wealth, while honest middle-class taxpayers and businesses suffer. This reduces trust in the state.

The biggest risk is that it institutionalizes corruption. People know that even if they are caught, there may be future opportunities for legalization. This reduces fear of corruption and increases illegal wealth accumulation. A society’s stability depends not only on economics but also on moral foundations. When that foundation weakens, long-term development becomes unsustainable. Therefore, ending this policy is not only an economic decision but also a moral responsibility.

The opportunity to whiten black money creates the greatest injustice for honest taxpayers. Those who declare income honestly and pay taxes regularly contribute consistently to state development. On the other hand, those who evade taxes or acquire wealth illegally receive special opportunities to legalize it. This destroys fairness in the tax system, leaving honest taxpayers financially and mentally deprived.

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. From an Islamic perspective, this is unjust, as the Qur’an instructs not to deprive people of their rightful dues. This sends a wrong message that dishonesty is more rewarding than honesty.

Although this policy is an internal matter, it has international implications. A country’s transparency and accountability are crucial for foreign investor confidence. Repeated legalization of undeclared money creates the perception that corruption and tax evasion are tolerated.
Bangladesh is already under international scrutiny regarding money laundering and capital flight. In such a situation, this policy can weaken foreign investment confidence. It also damages the moral position regarding the repatriation of laundered money, as allowing legalization sends a contradictory message internationally.

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 alone are not enough-they must be applied equally to all. Only then can a transparent and just economic system be established.