Budget Concerns

Source: Ehsanur Raza Ronny

Every time a national budget is announced, the car buying and car owning crowd start having migraines and severe headaches from the copious amounts of hair they pull out from their heads, often augmented by sullen shakes of the head and some liberal head scratching at the ridiculous nature of the supplementary duties placed on cars. Cue angry Facebook statuses and insults hurled at the finance minister's lack of foresight.

So what has the government done this time?

No replacement for displacement
If you're eyeing that 2000cc Toyota Premio on tradecarview.com because a 1500cc Premio F just wont cut it, you're in luck. The newly sanctioned budget has a lower supplementary duty on cars with engine displacement ranging from 1501 to 2000cc, down to 100 percent of listed price as opposed to the previous 150 percent. That basically translates to cheaper mid-level luxury cars, which is a good thing if you're a car geek but kind of redundant when you think the primary goal of the budget with regard to the transport sector is to reduce traffic congestion and increase government revenue from taxation. Where is the increased revenue from the luxury cars? Beats us, but its not entirely a daft idea, as the range of vehicles imported (reconditioned or otherwise) has scopes of increasing, providing more choices and options for the car buying crowd.  

And ye shall ride in cheaper SUVs
Along with lower duties levied on luxury cars, the new budget has lower taxes on Sports Utility Vehicles (between 2,001-2,750cc), down to 200 percent from 250 percent. The gas guzzling luxury vehicles, oft the choice of transport for ministers and business owners and the social elites, are now effectively cheaper. It seems the budget is tailored to reducing the duty on luxury automobiles, and if the middle and upper-middle classes can afford to reach up and buy cars previously reserved for richer folk, what's the harm, right? Keep reading.

Little consideration for the small folk
Contrary to previous budgets, sub 1500cc vehicles get no special privileges, with the same, albeit quite low duty of 45 percent placed on cars in that displacement range. Expect most of the models brought in on a regular basis in the reconditioned and brand new car markets to cost relatively the same as before. Why this crunch on smaller displacement cars while larger displacement luxury cars are cheaper to import? We assume it's a way of discouraging new car buyers from upgrading to newer imports, unless they are really, really rich.

Going green? Pay up.  
With quite the emphasis placed on fighting climate change elsewhere on the budget, the finance minister sure made a drastic u-turn when it came to environment friendly, fuel efficient hybrid cars. Previously, hybrid car importers enjoyed a low rate of 30 percent supplementary duty on hybrids with 1,500 to 2,500cc conventional powertrains, but due to a lack of trained technicians with the ability to ensure maintenance of these cars, imports were quite low. Its picking up however, and the government thinks it's the opportune time to increase the duty on hybrids in search of revenue, by raising the duty to 60 percent. Funnily enough, and I quote finance minister AMA Muhit here, “This will encourage importation of more quality and environment-friendly vehicles, yielding revenue.” We don't know if he accidentally added a zero and wrote 60 percent instead of 6, but generally a higher duty on a car makes it more expensive, which reduces its ability to sell.

Seating more will cost you more.
Microbuses and pickup trucks carry a higher supplementary duty (45 percent, up from 30) in the new budget if their engine size falls between 1500 to 1800cc, while higher displacement ones have the same 60 percent tax on them as before. Company cars and delivery trucks will be more expensive, as the import of these vehicles require “some control.”

More revenue equals better roads and public transport, right?
Sure. In theory. Although, going by the past few years, the benefits are long term, and this unicorn of “reduced traffic congestion” the government is running after, seems to be nowhere in sight. Right now, the three way tug of war between car importers, car buyers and the government regarding import duty, transportation sector advancement, and environmental impacts of automobiles, doesn't seem to be letting up even a little. Almost atypical of Bangladesh? You decide.

Illustration: Ehsanur Raza Ronny