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Long-term car duty structure suggested

Md Hasan
Demand for reducing duties on car imports in the next budget is being raised now from the people involved in the automobile industry, as people think owning a car is a necessity in the absence of proper public transportation.
The industry has become commonplace for imposition of high taxes in each year's budget. However, the growth in car sales figures does not depict the government's strategy to discourage car imports.
Just prior to the announcement of the budget, car sales jump by 20 percent than the previous year, as customers anticipate higher taxes on the automobile industry.
A debate remains in the market — is it rational to discourage the import of cars before a comfortable transport system has been established? According to Bangladesh Roads Transport Authority data, around 10.54 lakh vehicles are serving the 150 million people in our country.
Many experts say importing cars should not be discouraged, as no suitable public-oriented transportation system exists. Otherwise, due to a lack of transport, people cannot participate in the economy at their level best.
"Infrastructure development should be prioritised in the coming budget so that owning cars would not burden the city," Habibullah Dawn, president Bangladesh Recondition Vehicles Importers and Dealers Association (BARVIDA).
According to Bangladesh Road Transport Authority (BRTA) data, until 2007, of the total 10,54,067 vehicles in the country, there were 1,48,425 private cars, 67,031 jeeps or medium buses, 12,277 taxis, 34,645 buses and 34,970 mini buses transporting for both private and public services. The remaining number of vehicles is used to transport goods around the country.
Of the total vehicles registered for public transportation, around 60 percent are
running in Dhaka city alone. In the private and public travel category, 1,15,880 cars, 46,728 jeeps, 10,672 taxis, 6,152 buses and 8,098 mini buses are used to transport people in Dhaka.
In Bangladesh, several local importers import brand new and used vehicles.
Japanese reconditioned or used cars mainly dominate the market. However, some world-class brand such as BMW, Mercedes-Benz, Mitsubishi, Nissan, Toyota and Ford are also being sold in the market.
After slowing business over the last two years, the auto industry is enjoying a momentum right now, as a huge number of cars are being imported.
The high duties are a bar for both used and brand new cars. Based on different categories, the government imposed a minimum 60 percent to a maximum 600 percent duty on brand new car imports, according to Bangladesh Automobiles Distributors Association (BADA).
On the other hand, used car importers face 20 percent to 350 percent duties on different slabs.
Importers say the imported vehicles duty structure changes each year in the budget; sometimes there is a hike in duty, sometimes the slab on the engine capacity
changes. But why each budget policy needs to change is not understandable.
"The supplementary duty on brand new cars should be reduced by at least 50 percent from the existing rate," says M Salahuddin, president of BADA. "The government should go for a long term duty structure,” he added.
In its budget proposal, BADA, the brand new car importers association, suggests announcing special incentives for companies who are willing to set up manufacturing or assembly plants in the country.
BARVIDA chief Dawn suggests the government allow the imports of any used vehicle. The present budget allows the import of used cars that are one to four years old only.
Dawn also proposed the government fixes the duty on the import of used cars, instead of changing it in every budget. He said if the duty on a used Toyota car is Tk 4,50,000 lakh, the government can fix it at Tk 4,70,000, so that importers can smoothlyrelease cars from the port.
According to industry people, the government earns more than Tk 2,000 crore from the automobile sector by imposing taxes at different levels.
In addition to reduction in duties, stake-
holders urged the government to allocate more funds in the budget to develop roads and highways within and outside the city.
Both BARVIDA and BADA presidents stressed inter-city road development and introduction of more public transportation services for the mass.
They said people are eager to own cars due to a lack of public transportation facilities. They suggested construction of subways, flyovers, and an increase of more link roads in the city.
"The government should firstly focus on mass transportation systems, before discouraging car imports," said M Rahmatullah, a transport expert.
Rahmatullah, who worked for the UN, said if the government does not confirm transport systems for the mass and discourages imports, people would not be able to commute freely.
He said the government can restrict car imports in the next decade, if urban transportation plans are executed.
"I was compelled to buy a car as the city's transportation system is not suitable," said Kamruzzaman Chowdhury, a recent car owner.
hasan@thedailystar.net