The government has hiked taxes up to 100 per cent in all types of commercial vehicles, hoping to boost revenue from a sector where evasion is rampant, amid loud outcry from the transport owners.
The new rates, made effective from July 1, saw taxes on luxury buses double to Tk 10,000 a year, minibus and coaster to Tk 4,000 from Tk 2700 and five-tonne truck to Tk 5000 from Tk 4000.
Not a single mode of transportation escaped from the “presumptive tax” hike, including 52-seater buses, cargo and container carriers, taxicabs, human haulers, pick-ups, tank lorries, maxies and small lorries.
The revenue board has issued a statutory regulatory order (SRO) enforcing the decision. The taxes would be collected when a motor vehicle renews its fitness or at the time of its registration.
National Board of Revenue (NBR) officials said the tax hike was the first since the year 2000 and they did it to boost revenues from one of the country’s fastest growing sectors.
“Although the transport sector witnessed a boom in the last few years, its contribution to national exchequer was only Tk 2.0 billion in the last fiscal year,” a top NBR official told the FE.
The hike and a stepped-up enforcement of the latest rates would double tax collection from the transport sector, he said, describing the motor vehicle owners as leading “tax dodgers” in the country.
The hike follows an internal study by the NBR in which it has found that transport sector is the least taxed in the country, despite it accounts for 11 per cent of the Gross Domestic Product (GDP).
Data released by the Bangladesh Bureau of Statistics showed the transport sector grew nearly 100 per cent in the last five years, with land transport making up some 76 per cent of the sector.
Revenue officials ruled out the fear that the latest hike would result in major increase in passenger fares or goods transportation cost in the coming months.
“We have found that expenditure for per passenger will rise by only Tk 0.18 due to the tax hike. There is no scope for significant increase in ticket fares,” the official said.
If the transport owners try to cash in on the situation, they would be seriously dealt with, he warned.
The presumptive tax was first introduced in 1999 in the country’s transport sector, but the board kept the rates at the minimum, as the motor vehicle owners needed government’s patronisation for growth.
“But the situation has since changed. Transport sector is making huge profits every year. But the lion’s share of the income remains undisclosed,” the official said.
NBR officials said their study has found that a major chunk of undisclosed income being generated in the country every year comes from the transport sector.
“We have calculated that the revenue proceeds from the transport sector should be around Tk 10,000 crore ( Tk 100 billion) given the share of the sector in the country’s GDP,” another official said.
“We think it is time to streamline taxation in the sector and bring it under regular tax system,” he said.
In an instant reaction, transport owners warned that the tax hike would be “counter-productive”, leading to more evasion in the sector and forcing the owners to pass the cost on to the passengers.
“It’s true that thousands of transport owners don’t pay taxes at all. But the latest hike won’t stop leakage. It will only encourage them to evade taxes,” said Khandaker Rafiqul Hossain, president of Association of Bus Companies.
“I know a company which owns 600 buses but it never pays taxes. They never bother to renew fitness certificates and most of the buses don’t have any real registration number,” he said.
According to the Bangladesh Road and Transport Authority (BRTA) statistics 1.1 million motor vehicles ply in the country’s roads. But the owners said only a small fragment bothers to pay taxes regularly.
He warned that instead of coughing up more revenues from the sector, the latest tax-hike would only add woes to the passengers and raise the cost of transportation in the country.
“It will give the owners a very good pretext to increase fares. And increased fares and trucking cost would eventually raise prices of goods in the country,” he added.
The NBR order makes the payment of transport tax mandatory on advance basis in the head and regional offices of the BRTA. It could be adjusted with the actual tax return.
Authorities will not issue registration number or fitness renewal certificates unless the vehicle owners show the tax payment documents.
Under the new order, taxpayers could include the income earned from their vehicles in their income tax return. Tax rates will vary for vehicles below ten years and above ten years.
Source: Financial Express
