Multiple car owners may face carbon tax

Individuals having more than one car may have to pay carbon tax in FY24 if they register the vehicles in the same name.

They may have to pay an additional Tk 25,000-2,00,000 in taxes, according to sources at the finance ministry.

The government is likely to impose this tax for the first time in the upcoming budget to reduce greenhouse gas emissions, which will mitigate climate change impacts, they said.

The tax will also discourage the personal use of multiple motor vehicles, increase government revenue, and curb inequality among citizens, they added.

Besides, the move would boost electric mobility in the country and encourage travellers to use fuels that reduce pollution as well as cost less per mile of travel, insiders said, adding the government should increase policy support for environment-friendly cars. The increased use of cars is resulting in traffic gridlocks that no one can escape, they emphasised.

The government increased supplementary duty on motor vehicles in the current budget. The duty on the import of 2001cc to 3000cc cars was raised to 250 per cent from 200 per cent and 3001cc to 4000cc cars to 500 per cent from 350 per cent. The supplementary duty on hybrid vehicles was also increased in the budget. Many countries have some form of carbon dioxide-related tax, and the rate depends on either the purchase or the use of motor vehicles.

There are also a number of countries where the carbon tax rates depend on the fuel efficiency of the vehicles in question, which is closely linked to the CO2 emissions caused. A 2017 study by London School of Economics researchers said after introducing a carbon tax and a value-added tax on transport fuel in Sweden in the early 1990s, carbon dioxide emissions from the Swedish transport sector reduced by around 11 percentage points in an average year relative to a comparable synthetic control unit, with the carbon tax alone affecting a 6 percentage point reduction.