The preposterous increase of AIT proposed by BRTA

By Anonymous

The automobile industry falls under the most rapidly growing sector of Bangladesh. The automobile industry is recognized as the most potential industry in giving the most economic growth some more pace. Our government on the other hand is not handling the pace in their benefit as they have proposed an absurd increase in the advance income tax structure has a sudden increase of 50-67 percent as the Budget of Bangladesh 2020-21 was imposed dating in 12th June 2020. They consider this industry as the first step into regaining the lost revenue by imposing huge amount of tax on different engine displacement range of the privately owned automobile (Displacement is the Cubic Centimeter or more popularly known as the CC of a particular car’s engine). It is seen that a vacuum has been created as the total rule of TAX proceedings has been changed overnight. Confusions have occurred at different stakeholder’s level due to lack of knowledge on the new fiscal policy, something I feel includes even us.

The pre-budget documents suggest that there is going to be an increase of 50-67 percent of annual tax, subject to engine displacement. The Bangladesh Road Transport Authority (BRTA) under Section 68B of the Income Tax Ordinance 1984, collects advance tax from private vehicle registration and annual fitness renewal. On top of that private vehicle, owners have to pay for premium Insurance making it the biggest amount, that goes to insurers.

Here is a table for previous year’s AIT in comparison of the newly formed tax structure proposed by BRTA in the new 2020-21 budget:

Displacement Previous ATT New ATT Percentage increase
Upto 1500cc 15000 25000 67%
1500cc-2000cc 30000 50000 67%
2000cc-2500cc 50000 75000 50%
2500cc-3000cc 75000 125000 67%
Above 3500cc 125000 150000 50%

 

As the table suggests, there is a substantial amount of increase in the AIT that will help to recover the lost revenue of the country but as a private vehicle owner how much eligible are we to pay a hefty amount of money on an annual basis when the income rate of the country is all-time low due to the pandemic. The economy of Bangladesh seen a decline from March as the world got introduce to a virus we commonly known as COVID-19 and many people is already suffering as many have lost their job and in such hard time, a spike in the taxation by the government has left many awestruck. The increase of 50-67 percent of AIT has worked only for the benefit of the Government body and has left many people considering selling their personally owned vehicle. Many owners have shown their concern as it will put an immense dent on their expenditures. To put the words in a picture, a 1.6 liter 4A-FE equipped Toyota Corona Premio is one of the favorite Japanese imports for the Bangladesh market. This particular model has been the most favorite for people who loved the reliability offered by the Toyota and the great mileage being a 1.6 liter engine, but now as we address the elephant in the room, according to the new law an annual of 50,000 taka has to be deposited to make the car road legal on the other hand a Land Rover P400e 2 liter PHEV priced around 2.3 crore approximately shares the same annual taxation making the policy, not public friendly. Keeping in mind it was the favorite of the middle-class consumer, it is almost impossible for anyone to sustain a property for which one has to pay such a huge amount. With the income rate of 15,100 BDT on an average per month, according to the Trading Economics global macro model, it is safe to say the Government has gone berserk with the new budget going hell-bent crazy in the recent fiscal policy. The very same consumer who once would have paid 30,000 worth of AIT will now reconsider getting a smaller displacement vehicle just to pay less making the government lose more money instead of growing their revenue.

The new tax structure needs to be uplifted, keeping in mind that Automobile sector of Bangladesh brings a substantial amount of revenue for the country but under the influence of new law all the different markets, i.e the used, recondition and brand new market is predicted to see a downfall in business. The fiscal policy needs to be thought through and changes are bound to be made. The Government body needs to change their propaganda as it will only make the Automobile industry face difficulties rather than booming in Bangladesh.

Lastly, I will like to add, as a solution we need to create a common understanding through awareness programs, conducted jointly by the respective Government body and the newly formed Bangladesh Automobile Owner’s Association. A common platform has to be introduced where both the parties can raise questions and discuss certain decision which otherwise is taken by the government with only their concern in their mind. In the end, through this all the stakeholders, i.e Government, sector leaders, private vehicle owners, and investors, can be gainers, creating a win-win situation for all in the long term.