Tuesday, 3 October, 2023

Carbon tax likely on vehicles

Owners having more than one vehicle to count carbon tax

Carbon tax likely on vehicles

The government is likely to impose a carbon tax for the first time in the country in the budget of the next fiscal year to reduce carbon emissions and encourage the use of public transport.

According to the plan, owners of more than one car, jeep, or microbus may have to pay taxes ranging from Tk 25,000 to Tk 2,00,000 during registration and renewal of registration, depending on engine capacity.

"We are thinking of imposing a carbon tax to curb pollution and discourage the use of personal vehicles. This tax exists in many other countries as well," said a senior official of the Ministry of Finance.

He also said that the proposal was discussed at a recent meeting chaired by Finance Minister AHM Mustafa Kamal and presented to Prime Minister Sheikh Hasina for approval on May 14.

The finance minister is expected to propose the tax while placing the national budget for 2023–24 in parliament on June 1.

The decision comes at a time when an increasing number of personal cars are plying the streets, particularly in Dhaka, which suffers from serious air pollution and huge traffic congestion.

Environmentalists and economists have appreciated the move and urged the government to bring industries that emit carbon under this tax umbrella.

Bareesh Hasan Chowdhury, a research lawyer at the Bangladesh Environmental Lawyers Association (Bela), said, "Carbon taxes are an interesting innovation, but the government has to take this as an environmental policy rather than finding another source of tax-related income."

"Carbon tax can be introduced by creating a long-term and acceptable framework," Chowdhury, also a regional facilitator at Friends of the    Earth Asia Pacific, said, adding that the government can declare a deadline to cover carbon-emitting industries as well as cars.

In the current fiscal year, the government increased supplementary duty on motor vehicles. The supplementary duty on the import of 2001 CC to 3000 CC cars has been increased to 250 percent from 200 percent, and for cars from 3001 CC to 4000 CC, it has been hiked to 500 percent from 350 percent.

Currently, tax is collected at source during registration and renewal of fitness through the CC of private vehicles. Tk 25,000 is collected for 1500 cc cars, Tk 50,000 for 1500 to 2000 cc cars, Tk 75,000 for 2000 to 2500 cc cars, Tk 125,000 for 2500 to 3000 cc cars, Tk 150,000 for 3000 to 3500 cc cars, and for vehicles with a capacity above 3500 cc, tax is levied at source of Tk 200,000.

Bangladesh has more than 57 lakh registered vehicles, and the number of personal passenger cars, jeeps, and microbuses stands at over 600,000, according to data from the Bangladesh Road Transport Authority.