The Financial Express

Tax benefits for car industry  

Published: April 22, 2019 22:08:58 | Updated: April 24, 2019 21:22:16

Tax benefits for car industry   

In the latest in its series of pre-budget meetings, the National Board of Revenue (NBR) informed that the government was considering giving tax benefits for car manufacturing in the country. Since the government wants factories to grow up for the manufacture of cars locally, it has in mind extending required support to the industry including tax incentives. At the same time the government wants investors to utilise the offered benefits. Although the budget for the FY2019-20 is not yet out, NBR meetings with various business groups and discussions there are likely to have a substantial effect on the overall government fiscal statement next June 30.  Therefore, the government's latest words of hope for the domestic car industry must be a welcome idea. This must be seen in the light of the government's previous budget efforts that included incentives to electric cars. 

A car has long been epitomised as an embodiment of middle class growth in a developing country. Some take it as a prestige symbol. Although a good section of the population is still below the poverty line, and many young people are without jobs, the country's burgeoning middle class has a proven insatiable demand for cars. This is borne out by the figures related to new cars getting registered every day, although at the same time they further harm traffic management on mostly wretched roads. Besides, very little care is shown to the air quality. While Japanese manufacturers enjoy a near monopoly in sending both used and new cars to Bangladesh, other foreign actors from India, Korea, and the United states have recently shown active and effective interest in locally producing/assembling vehicles. These would bring foreign technology to the country, apart from the money; and precious jobs will be created. One of the first in this arena had been the Pragati Industries, the country's own. That Pargati has not been sufficient is proven by the fact that imported cars and jeeps dominate the local market overwhelmingly. If the government can encourage foreign and domestic investors with incentives to establish factories locally, as the NBR indicated, there can hardly be a better option. Apart from the jobs that will be created in the factories, every new vehicle will come up with the requirement of a new driver since it is not mostly the culture here that the owner drives the car. Besides, as one foreign investor has indicated, they want to reduce the market price of cars substantially. There can hardly be better news, since car prices are the highest in Bangladesh in the subcontinent.

It is good to note that in the immediate past budgets, the government put stress on environment-friendly technology like electric cars. Industrialisation without care to the environment is self-destructive. Proposed electric cars will add to the efforts taken to improve air quality, besides doing other good things to the economy like cutting on fuel costs and bringing in virtual energy independence, for the electric car-owners at least. As new cars and vehicles join the ever-increasing flow, traffic management must take precedence along with environment. New vehicles are cursed for adding to the incalculable wastage of man-hours irreparably. As such traffic supervision and road quality must improve to take advantage of the proposed incentive to local car industry through the tax benefits, at the same time keeping in mind the very important issue of environment-protection.

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