Vehicle importers relieved as taxes remain unchanged
Reconditioned vehicle importers and distributors have breathed a sigh of relief at the tax and duty structure being kept the same in the proposed budget, saying this would help keep pressure off and business stable amidst the pandemic.
"The good thing for the sector is that the government has not changed the tax and duty structure," said Mohammed Shahidul Islam, secretary general of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida).
"So in this point of view the proposed budget is positive for automobile sector."
Barvida welcomes the proposed budget, saying it was placed with an initiative of stimulating the economy and to protect the local industry from the economic fallouts of COVID-19.
Credit flow should become smoother to stimulate the market of reconditioned vehicles, said Islam, calling for the inclusion of the importers and traders in the government's incentive package.
According to Barvida, the duty on import of reconditioned vehicles in some cases is almost double compared to those of new cars because of discrimination by customs in the valuation of cars.
As a result, the import of reconditioned cars declined due to falling demand from the customers and the businessmen in this sector have been facing a lot of financial losses over the last couple of years, it said.
Barvida understands that the government is under pressure for the need to generate revenue amidst the coronavirus crisis, said Islam, adding that they want to help the government in revenue generation.
Regarding hiking fees payable by automobile owners, Islam said the government set a target to earn revenue in an easy way. But it would create pressure on the middle class who maintain vehicles for smooth movement amidst limited income, he said.
He pointed to some drivers who have become dependent on ridesharing services, asking how they would manage a minimum of Tk 33,000 per year, including registration renewal and road permit fees.
The government usually earns around Tk 3,000 crore from relevant fees of around 10 lakh vehicles running across the country and the rise in fees may bring in another Tk 1,000 crore, he said.
According to the proposed budget, the renewal fee for a 1,500cc car will be Tk 25,000.
For those of 1,501cc to 2,000cc, it will be Tk 50,000; for 2,001cc to 2500cc Tk 75,000; 2501cc to 3000cc Tk 1.25 lakh, and 3001cc to 3500cc Tk 2 lakh.
For microbuses it will be Tk 30,000.
If the government waives the rent of April and May of the Chattogram and Mongla ports, the importers will move quickly to pay fees and take away some 8,000 vehicles they have kept there, generating some Tk 1,000 crore in revenue, he said.
According to data of Barvida, their 870 or so members pay more than Tk 3,000 crore in fees to the government every year. Besides, they also pay their income tax and have already invested around Tk 20,000 crore in the past 30 years.
Abdul Haque, president of Barvida, believes the pandemic largely affected the middle class and since they constituted the majority of this sector's customers, this would significantly reduce car sales.
"Automobiles are not daily essentials and we fear that the current scenario will continue for several months before sales regain their momentum," said Haque.
About 6,000 vehicles have been sold this fiscal year, whereas last fiscal year the figure had reached some 14,000.
Showrooms have been shut since March 26 and some Barvida members opened theirs on a limited scale from May 10, all to no avail as there is little to no customers, Haque said.
Barvida is a big source of revenue for the government and they pay thousands of crores of taka a year to the government exchequer in the form of taxes, he observed.
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