A carbon tax is coming into effect for the first time in the country for multiple private vehicles.
The government has taken the decision to deal with city traffic, contain carbon emission and encourage the use of public transportation.
The move is coming into effect at a time when an increasing number of private cars are hitting the streets in urban areas, particularly in the capital city, which suffers from serious air pollution and huge traffic congestion. Nearly 100 passenger cars, jeeps and microbuses hit the streets of Bangladesh on average daily in 2022.
According to the decision, the owners of multiple passenger cars, jeeps and microbuses have to pay the carbon tax depending on their engine capacity.
Carbon tax is usually paid by them who produce excessive greenhouse gas emissions through their activities. The carbon tax has been implemented in more than 35 countries till now.
The government imposed the carbon tax in the 2023-2024 budget. According to the latest budget, taxpayers who own more than one private vehicle would be subject to an additional fee ranging from Tk. 25,000 to Tk. 350,000 annually when registering and renewing a private second vehicle, depending on engine capacity. Electric cars are also covered in the carbon tax.
The Bangladesh Road Transport Authority (BRTA) will collect the carbon tax as well as environmental surcharge from owners of private vehicles.
On October 13, the National Board of Revenue (NBR) issued a circular directing the BRTA to collect the environmental surcharge.
An official of BRTA on Saturday (November 4) told the Bangladesh Post that they have received an instruction in this regard from the NBR. “We have sent a letter to the ministry concerned, seeking guidance in over collection of the carbon tax. We have also written to NBR for further instruction. We will start collecting the surcharge after receiving the further instructions,” he said.
Sk. Md. Mahbub-E-Rabbani, a director of BRTA; said that carbon tax is an interesting innovation. The decision was taken to reduce carbon emissions and vehicle usage.
According to the NBR circular, environmental surcharge or environment tax is not compatible with any other tax. If a taxpayer has a vehicle fitness certificate from the BRTA for multiple years, he/she must submit the environmental surcharge to the Joint Commissioner of Taxes along with the income tax return.
According to the government’s decision, motor vehicles other than buses, minibuses, coasters, prime movers, trucks, lorries, tank lorries, pickup vans, human haulers, autorickshaws and motorcycles will be included in this environmental surcharge.
In case of renewal of vehicle registration or fitness for more than one year, the environmental surcharge must be paid before filing the income tax return every year. Otherwise, the Deputy Commissioner of Taxes shall collect the same while processing the income tax return or assessing the tax.
According to the circular, if the vehicle registration or fitness is renewed for multiple years, the environmental surcharge will have to be paid at the applicable rate by June 30 of the financial year following the financial year in which the vehicle registration or fitness is renewed.
The surcharge rate-- Tk. 25,000 for every motor vehicle up to 1500CC or 75 KW; Tk. 50,000 for every motor vehicle exceeding 1500 CC or 75 KW but not exceeding 2000CC or 100 KW; Tk. 75,000 for every vehicle of 2000CC or more than 100 KW but not more than 2500CC or 125 KW; Tk. 1,50,000 for every motor vehicle exceeding 2500CC or 125 KW but not exceeding 3000CC or 150 KW, Tk. 2,50,000 for every motor vehicle exceeding 3000CC or 150 KW but not exceeding 3500CC or 175 KW; Tk. 3,50,000 for every motor vehicle above 3500CC or 175 KW.
The surcharge amount has to be deposited to the government treasury through A-Challan and the copy of A-Challan should be submitted to the vehicle fitness renewal authority.
Environmentalists said that if this carbon tax is collected and invested in public transport, the suffering of common people will reduce, and life and nature will be protected.
Abdur Rahman Masum, an income tax lawyer; said that environmental surcharge has been a demand of environmentalists for a long time. If this is implemented, the traffic pressure in urban areas will reduce to some extent, while the suffering of people will also reduce a little.
Talking to Bangladesh Post on Saturday, Professor Dr. Ahmad Kamruzzaman Majumder, founder of Center for Atmospheric Pollution Studies (CAPS) and chairman of Department of Environmental Science at Stamford University Bangladesh; said that the purpose of imposing carbon tax is to reduce the pressure of private cars on the roads and attract people to public transport. If the carbon tax is not spent on environmental development, people will not get the benefit, he added.
He also said that the number of unfit vehicles in public transport is high. Most cars don’t have fitness. Public transport should be looked at now. The carbon tax should be invested in public transport. Only then will the benefits of this taxation be enjoyed by people from all walks of life, he added.
Bangladesh has more than 57 lakh registered vehicles and the number of personal passenger cars, jeeps and microbuses stands at over 600,000, according the BRTA.
The finance minister in his budget speech for 2023-24 in the Parliament said. “We are considering imposing a carbon tax to discourage the rising use of personal vehicles and curb pollution. This tax exists in various other countries too.”
He had also said, “We are planning to collect the surcharge from all car owners, including companies and firms. If a company has more than one vehicle, it is likely to come under the carbon tax.”