Why can’t wealth be questioned?

Ali Imam Majumdar | Update:

At times certain unwarranted requests crop up in various spheres of life and in many instances senior government officials even give indulgence to these requests. This time, the Real Estate and Housing Association of Bangladesh (REHAB) has come up with a host of undue demands.
One of the demands is that apartment buyers cannot be questioned about their source of income. They even want the use of black money to be allowed.
There is a slump in the labour-intensive real estate and housing industry and it’s the government’s responsibility to look into the problem and offer all possible help to resolve crisis. All sorts of materials are imported for this sector, bringing in duty and VAT. The entrepreneurs invest their own money and take loans from the banking system too for investment. But even after all this, many flats remain unsold due to lack of buyers. There is bound to be an economic fallout from this situation and the matter demands serious attention.
Surely that does not mean the buyers’ source of income should remain unquestioned and black money can freely permeate the sector. In the recent past there was a long spell when black money could be whitened with a perfunctory payment. But this works as a catalyst for corruption. We talk about freeing the country of corruption. We also know that corruption has eaten into nearly two per cent of our GDP. But when the chance is given to whiten black money, the fight against corruption is a farce. If legal sources of income are revealed, there is scope to whiten the money by paying the due taxes and fines.
Much of the black money comes from bribes, extortion and other illegal means. Limiting the scope of using this money is part of the resistance against corruption. A chunk of the black money is invested in plots of land, flats, houses, farmhouses, vehicles, etc. It is said that if this black money is not allowed to be laundered within the country, it will simply be siphoned off abroad. It is indeed being siphoned off overseas anyway. This is a weakness in our state system. That doesn’t call for scope to allow black money being laundered at home. And it also calls for stern measures to block the illegal flight of capital.
Those who demand that that the source of money used to buy a flat not be questioned, point out that house building requires around 250 different materials including rods, cement, tiles, commodes, glass panes, doors and so on. Duty and VAT are imposed on these items. Then there is a 14 per cent registration fee when the flat is handed over. After all that, they say, the National Board of Revenue (NBR) and the Anti-Corruption Commission (ACC) shouldn’t probe the source of income of the buyers.
It’s not only REHAB that is making this demand. An influential minister of the government has also voiced a similar opinion. If the tax of any construction material is excessive, demands can be made to lessen that. But how can the source of a buyer’s income not be questioned?
It is true that the buyers keep the construction industry alive. This is true of consumers in all sectors. If they have to show the source of their income, then so do the flat buyers. It is a matter of ethics.
The flat buyers anyway have the scope to conceal some of their funds. Erroneous polices of the government allow for the actual costs to be hidden. The deeds invariably show a lesser price, sometimes even half the actual price. The government is cheated of due registration fees, stamp duty and so on. So NBR or ACC can ask only for information related to the price quoted on the documents. Even then there are objections! There has been recession in the housing industry for quite a few years now and many place the blame on a section of the builders.
We laud the real estate entrepreneurs for addressing the housing crisis in the country, for creating jobs and playing a positive role in the overall economy. However, hordes of people enter this business without taking people’s purchasing power or the actual market demand into cognizance. As the land owners are paid exorbitant amounts and given unrealistic shares of flats, the per-unit price of the flats shoots up.
Builders are constructing similar flats in the districts and upazilas too. The authorities indiscriminately approve of multi-storey buildings. There are six storey buildings on lanes so narrow that two rickshaws can barely cross each other. The original land owners of these plots lose their homes temporarily. There are quite a few builders who begin construction and then grind to a halt, so simply abandon the project. They do not pay the land owners the stipulated amount. Or there are no buyers for the flats. The districts and and the big cities, including Dhaka, are surfeit with ‘for sale’ signs.
REHAB can justly submit a list of construction materials to the government, asking for a cut in import duty. They can ask for the buyers to be provided with low interest loans. The government can provide banks with funds for these low interest loans. But the main problem lies with the cost of the land itself. The price of land is exorbitant. This pushes up the price of a flat abnormally high. The problem is simply being exacerbated. The cut-throat competition has to be curtailed.
We want corruption to recede. Various institutions have a role to play in this. NBR and ACC have significant roles. At one time we were among the most corrupt countries of the world. Certain institutional reforms have helped us improve our position to an extent. We can be quite hypocritical at times. We praise ACC effusively when it catches someone else, but castigate it if it looks in our direction. ACC and NBR should not be the source of public harassment either. Their officers and employees must be monitored, while we must lend our support. These two institutions must not abandon their legal rights and responsibilities to indulge unjustified demands. That would be wrong, unacceptable.

· Ali Imam Majumder is former cabinet secretary and can be contacted at majumder234@yahoo.com <mailto:majumder234@yahoo.com>. The article originally published in Prothom Alo print edition has been rewritten in English by Ayesha Kabir.

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