Setting its gaze on lawmakers’ facility of importing duty free vehicles, the International Monetary Fund (IMF) has recommended imposing duty on the process in the upcoming budget for FY2024-25.
In line with the IMF prescription, the National Board of Revenue (NBR) is likely to propose a 25 per cent customs duty on motor vehicles imported by lawmakers. However, this duty will still be much lower compared to the amount citizens are paying for imported vehicles.
Regular consumers are currently paying a maximum 500 per cent as supplementary duty, excluding other taxes.
Finance ministry officials involved in the budget formulation said their proposal will be placed for Prime Minister Sheikh Hasina’s approval on May 14 this year.
Officials say NBR chairman Abu Hena Md Rahmatul Muneem is optimistic that the prime minister will approve this move, which will reduce discrimination between lawmakers and others, while increasing revenue collection.
The International Monetary Fund (IMF), a global lender that committed a $4.7 billion loan to Bangladesh, had a condition of increasing the tax-to-GDP ratio by 0.5 percentage point in FY24, 0.5 percentage point in FY25, and 0.7 percentage points in FY26.
Within three months of taking charge as newly elected MPs, at least 100 cars worth Tk 300 crore entered Bangladesh for lawmakers under the duty free import facility, and these lawmakers’ family members are mostly using those vehicles, said officials.
If the 25 per cent duty had been levied on such car imports, the NBR would have collected Tk 75 crore. Though it is a minimal portion of the collection target set for the revenue board, it is a great move to reduce a large extent of facilities provided to lawmakers, experts claim.
It should be noted that these cars are subjected to pay up to 500 per cent supplementary duty.
What facilities do MPs have?
According to a statutory regulatory order (SRO) signed by NBR chairman Abu Hena Md Rahmatul Muneem in 2022, MPs are able to import 2,000cc hybrid motor car or micro-bus, or up to 4,500cc hybrid jeep or one electric motor-run vehicle or other vehicles with only electric motor propulsion with duty free concessions.
Under this SRO, MPs are enjoying vehicles imports, include fuel-run vehicles not more than 1,650cc; diesel fuel-run vehicles not more than 1,800cc; 2,000cc hybrid vehicles; 2,000cc fuel-run microbuses; 2,000 cc fuel-run hybrid microbuses; 3,000cc jeeps; hybrid 3,000cc jeeps; fuel-run 4,500cc jeeps; and hybrid 4,500cc fuel-run jeeps.
The move is in addition to prior benefits allowing MPs to import duty free 1,650cc petrol or gasoline-run motor vehicles, or up to 1,800cc diesel-run motor vehicles, or up to 2,000cc microbus, up to 3000cc petrol or gasoline-run jeep, or 4,500 cc diesel-run jeep.
A lawmaker can import one vehicle during his or her tenure without paying any customs duty, supplementary duty, sales tax, development surcharge and import permit fee.
Almost all MPs have reportedly imported motor vehicles under this facility and the vehicles are mostly being enjoyed by their family members.
The duty-free benefit on import of vehicles was introduced during HM Ershad's rule on May 24, 1987. However, due to rising allegations of gross abuse of the duty-free facility by MPs, the caretaker government scrapped the facility once in June 2007.
What do other citizens pay?
The government had increased supplementary duty on motor vehicles back in FY23.
The duty on the import of 2,001cc to 3,000cc cars was raised from 200 per cent to 250 per cent and 3,001cc to 4,000cc cars from 350 per cent to 500 per cent, while the duty for cars over 4,000cc remained unchanged at 500 per cent.
Besides, in the current fiscal year, the NBR introduced an environmental surcharge or carbon tax for multiple car owners.
Under the move, the owner of a car having up to 1,500cc or 75kW engines is subject to pay Tk 25,000 as environmental surcharge. The surcharge is doubled to Tk 50,000 for a car having the engine capacity of 1,501cc to 2,000cc or more than 75kW to 100kW.
Owners having a second car with a capacity of 2,001cc to 2,500cc or 101kW to 125kW will have to pay Tk 75,000.
A surcharge of Tk 1.5 lakh is applicable for owners of multiple cars with a capacity of 2,501cc to 3,000cc or 125kW to 150kW, and Tk 2 lakh for cars having engines over 3,000cc and Tk 3.5 lakh for cars with 3,500cc or 175kw and above engine capacity.
