Bangladesh Recond-itioned Vehicles Importers and Dealers' Association (BARVIDA) feared that a cut in the depreciation facility in the proposed budget has pushed up the prices of reconditioned cars by Tk 0.1 million to Tk 0.45 million.
BARVIDA has said this at a post-budget press conference at the National Press Club in the capital.The reduction in the depreciation facility has been made in the Finance Bill-2018.The fiscal measure came into effect from June 7.
Year-wise depreciation facility has been cut by 5.0 percentage point for import of reconditioned cars. This applies to all types of cars, including hybrid cars regardless of their engine capacity.
Speaking at the event, BARVIDA President Md Habib Ullah Dawn said the government has encouraged import of substandard new cars with this measure. "Those new cars are usually imported from third country. They also threaten the environment," he added. Dawn, however, welcomed the move to encourage import of environment-friendly hybrid cars.
Md Abdul Hamid Sharif, former president of BARVIDA, said prices of reconditioned cars would go up beyond 5.0 per cent due to an ad-valorem duty structure. An upward adjustment of Advance Trade VAT (ATV) by 1.0 percentage point for the next fiscal year (FY) would also cause an escalation in the prices, he stated. The BARVIDA leader demanded reintroduction of the depreciation facility of the current FY.
The BARVIDA has sought a 10 per cent cut in value as dealer/trade discount on actual prices of new cars quoted in the yellow book. The customs authorities calculate duty of a used car against its price after its year-wise depreciation. The BARVIDA leaders said the middle-income groups have to carry an additional tax burden due to a cut in the depreciation facility.
Dawn said the fiscal measure has facilitated the well-off people who can import new cars.Existing duty structure is faulty as tax on new cars is less than that of the reconditioned cars, he added. "This happens because customs authorities accept prices of new cars declared by importers after some adjustment," he mentioned.
According to BARVIDA data, the import of reconditioned car increased 34 per cent to 17,727 units year on year during the July-February period of the current FY. The BARVIDA leaders said the overall import of used vehicles would fall for the discouraging tax measure.
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