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Cascading effect amounts to 50 pc

Dealers demand withdrawal of 25pc surcharge on reconditioned cars
Reconditioned vehicles importers and dealers yesterday demanded withdrawal of the additional tax-load on automobiles and suggested that reconditioned cars be allowed to be imported for use as taxi-cabs, reports UNB.
The auto market will face a severe slump as the supplementary tax has led to an abnormal price-hike of motor vehicles." said Abdul Haque. President of Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA).
Addressing a news conference at a city hotel, he focussed on the Impacts of new tax measures on the reconditioned vehicles market and said the expected revenue would not be collected from the sector due to the duty-load.
The BARVIDA chief also mentioned the double taxation on motor vehicles, saying that although the new budget proposed 25 per cent supplementary tax. the actual tax would increase by 50 per cent.
He said the supplementary tax would be levied on the price after payment of duty on the invoice value of a vehicle. There has already been 25 per cent
supplementary tax on the vehicles over 1600 cc.
Moreover, value added tax (VAT) at 15 per cent on the total price would have to be paid, he said, adding that the VAT would now stand at 35 per cent of the invoice price of an automobile.
Also, the increase tax on the reconditioned vehicles and the reduced duty for import of taxicabs have created a major discrimination that would ultimately result in instability and distortion in the market, the BARVIDA president said.
Giving an example, he said a vehicle above 1300 cc would now have to pay a total duty of 153 per cent while the duty rate for taxi-cabs has been proposed to be reduced to 31 per cent.
"We are not against introduction of taxi-cabs. But service should be introduced after enacting the Emission Control Act, Motor Vehicles Act and some other necessary regulations," said Haque, the owner of Haq's Bay.
He said the government has apparently taken ad-hoc measures to introduce taxi-cabs without preparing grounds and suspected that the duty reduction in the budget might be used
to protect the interest of a particular group.
Indicating the group, he informed the newsmen that when a world class Japanese new taxi-cab will cost not less than Tk 12 lakh, an Indian Ambassador-type taxi can be imported at Tk 5-6 lakh.
Haque said it is clear that the government has opted for a tougher duty rate to mobilise more duty ahd revenue, but in reality the move would not succeed because of economic rea-
SGiving statistics, he said im-of motor vehicles are since 1995 when a total motor vehicles were imported through Chittagong port, followed by 11,692 in 1996 and 4.000 in six months of 1997.
Import of motor vehicles might fall further due to rise in prices, he said, informing that price of a 1300 cc car would rise by Tk 68,000 a 1500-1600 cc car by Tk 150.000. for 1800-2000 cc by Tk 225,000 and above 2000 cc by Tk 460,000.
The BARVIDA president said if a second channel is opened for Import of vehicles in the name of taxi-cabs without enacting proper rules and regula-
tions, there is a possibility of another spell of corruption and tax evasion as in 1985.
He said the government in 1985 allowed import of cars in the name of taxi-cab at 40 per cent duty, which had distorted market, but those who imported the vehicles never operated them as taxi-cab.
Haque demanded enactment of Motor Vehicles Dealers Act to make the dealers responsible and also urged the government to allow import of reconditioned vehicles for use as taxicabs.
He also suggested total withdrawal of the newly proposed supplementary tax on station wagons up to 16000 cc. withdrawal of the additional supplementary tax on cars up to 1600 cc and Jeeps up to 2000 cc.
The BARVIDA chief also demanded of the government to ensure that there would be no double taxation. He demanded equal registration fee for both reconditioned and new vehicles, and introduction of road tax.
BARVIDA leaders Alauddin Bhuiyan. Tareq Hossain Russel. WK Khan and MA Hannan were, among others, present at the press conference.