No more duty-free cars for MPs? A step long overdue

Illustration: TBS

The National Board of Revenues (NBR) is likely to propose a customs duty capped at 25% on motor vehicles imported by the lawmakers, according to a recent newspaper report. 

The 12th parliament formed in January – which includes newly sworn-in members – has so far imported around 100 cars worth Tk300 crore. This means that with a 25% duty in place, the NBR could collect around Tk75 crore from these imports. 

NBR's proposal, if implemented, would change a problematic policy, because while the common citizens pay up to 500% in supplementary duty for importing cars excluding all other taxes, the parliamentarians currently enjoy a 0% duty charge on imported cars. 

Moreover, NBR's proposal comes at the behest of the International Monetary Fund (IMF) which advised implementation of the duty in the coming budget. 

The IMF recently committed a $4.7 billion loan to Bangladesh. The loan comes with conditions, one of which is increasing the tax-to-GDP ratio by 0.5% in FY24 and FY25 and 0.7% in FY26. 

The proposal may be placed for the Prime Minister's approval later this week. 

What promoted and sustained this privilege

Duty-free cars for parliamentarians started during the regime of military dictator HM Ershad; the law came into effect in 1988. At the time, major opposition political parties, including the Awami League and BNP were spearheading a pro-democracy movement and, hence, did not have any representative in the parliament. 

However, when these major opposition political parties came into power in the following decades, they did not repeal the duty-free car facility for parliamentarians. 

This facility was labelled as a means for the MPs to work for the people in their constituencies. But for decades, newspaper reports uncovered how this facility was misused, how high-end cars were imported and sold to businessmen as a way to make money, and how it turned into a luxury for MP families to ride high-end cars at cheap prices. 

As per changes made to the law during the four-party-led government in the early 2000s, an MP can import two motor vehicles without duty during one's lifetime as a parliament member. After the first one, they may import a second one after an eight-year gap. 

The law also does not allow the cars to be sold. However, reportedly, that did not stop the lawmakers from finding loopholes and selling the duty-free cars. 

Former Finance Minister Abul Maal Abdul Muhith said in the 9^th parliament that the government had to pay a tax rebate of about Tk1,100 crore to buy 315 duty-free cars for MPs. 

In the 8th parliament, around 311 vehicles were imported through this duty-free facility; the number was  176 in the seventh. In the fifth parliament, it was 301. 

In the history of gross misuse of the duty-free car facility, only one parliamentarian had to face the law.  

"According to some credible sources, many MPs misuse the duty-free car facility. Although they are not supposed to sell duty-free cars, they still resort to fraud to sell those cars," said Dr Iftekharuzzaman, Executive Director of Transparency International Bangladesh.  

"So this has always been a concern. If you take a neutral poll from the people, they will definitely take a stand against the duty-free car facility of the MPs," he said.  

Life as an MP in Bangladesh 

With a depleting reserve, Bangladesh has experienced unprecedented economic struggles in recent times, however, the wealth of the parliament members has consistently risen irrespective of the economic outlook. 

For example, Feni's parliamentarian Nizam Uddin Hazari's wife Nurjahan Begum had assets of Tk4 crore before the 2014 elections. As per the asset statement (nirbachoni holofnama) submitted before the recent elections, their assets increased to Tk125 crore. It means their wealth increased over Tk120 crore in a decade, which analysts politely labelled as "unnatural."  

The Transparency International Bangladesh (TIB) analysed that MPs increased their wealth manifold during their tenure. A report published last week states that the assets of the MPs increased by a whopping 3065% (the same report also says that upazila representatives' wealth went up by up to 4200%). 

The wealth growth is highest among their wives and offspring, which has reportedly gone up by 12,400%.

Shushashoner Jonno Nagorik (SHUJAN) reported earlier this year that more than 90% of the current parliamentarians are multimillionaires (kotipoti) and around 67% of them are businessmen. 

While we speak about a "probable" 25% duty for the MPs' car import facility, we must look at these figures. With facilities, including monthly salary, various allowances, transport etc, an MP earns more than Tk1,70,000 per month. 

Additionally, they also have MP hostels, the facility for duty-free import of cars, the list goes on. 

"The extent of their wealth surprises us, yet, they don't pay duty… perhaps this is why the authorities are going with this step. The NBR can say more [about its rationale]," said Muhammad Abdul Mazid, former chairman of NBR. 

Economist Professor Dr M M Akash regards the NBR move as positive, however, he said, "The regular duty fee that applies to the common people should be applied to the MPs too."  

"It is better if the duty proposal is not discriminatory – that MPs will have a lower duty and others will have more – it shouldn't be like this," Dr Akash said. 

"[The MPs] shouldn't have special facilities for luxury consumption, in my opinion," he added. 

TIB's Iftekharuzzaman said the same. 

"By law, all citizens are equal. So this special facility for a representative is not acceptable. In fact, they have more responsibility. They could have set an example, but instead, they are taking such privilege, which is unreasonable. I feel this is contradictory to our spirit of the constitution," he said.

And given the country's economic status at present, "they should import the car in the same policy that is applied to the common citizens," Iftekharuzzaman added. 

The NBR move, if materialised, could be a positive step in the right direction, according to economists and experts. However, it all depends on whether the proposal is actually implemented or just remains on paper. 

A former official at the NBR explained that there could be two things behind the NBR move with the car duty proposal. One, there could be already a direction from higher authority and promises to pass this law – since tax collection is growing difficult, this could set an example. It is hard to rationalise higher taxation when MPs, who are super-rich, are being exempted. 

Or this could be just a move, like many earlier moves NBR had before budgets, to create a discussion and discourse in the media and with the public. And later on, they would say they aren't pursuing this anymore.

"The tax is imposed by parliament members. If they don't impose taxes on themselves, then people could consider whether or not they should give taxes too," the official said. 

This is also a question of social values, according to former NBR chairman Abdul Mazid. "We have seen the asset statements - their wealth has increased manifold - and yet they enjoy privileges like duty-free car facilities," he said. 

We contacted around a dozen members of the parliament for their views of the reported NBR move, but they didn't receive our calls.