The government is set to decide at the upcoming national budget session to abolish the long-debated privilege allowing Members of Parliament (MPs) to import cars duty-free. This is a significant step reflecting tax policy reform by limiting special benefits for those in public office.
Finance Minister Amir Khasru Mahmud Chowdhury said the decision is part of a commitment to ensuring transparency and equal taxation. Criticism has increased over the years due to misuse of this benefit and losses in government revenue.
He said the controversial privilege, granted under The Members of Parliament (Remuneration and Allowances) Order, 1973, will be abolished through necessary legal amendments.
The finance minister said, “During our tenure, this will remain permanently abolished.” He added that the decision reflects the policy of the ruling party.
It may be noted that upon assuming office, the government announced that its ministers and MPs would not avail duty-free cars or plot facilities. Similarly, Jamaat-e-Islami had earlier pledged during its election campaign that its MPs would not take such benefits.
However, under existing law, the facility for MPs remains in force and can still be availed if desired.
Under current provisions, MPs can import one vehicle—car, jeep, or microbus—per term without customs duty, VAT, development surcharge, or import permit fee.
In contrast, general importers have to bear around 25% customs duty, 15% VAT, 5% advance tax, and an additional 400%-500% supplementary duty.
Why this decision?
According to the finance minister, the duty-free car facility has long been criticized over allegations of misuse. There have been multiple instances of luxury vehicles—such as Rolls-Royce or Mercedes-Benz—being imported under this benefit.
A government task force report found that in FY23 alone, the state lost approximately Tk687 crore in revenue due to this facility. The decision stems from the need to protect state financial interests and ensure fairness in the tax system.
The finance minister said, “It is time to move away from the culture of personal benefits for public representatives. Everyone should be treated equally in taxation.”
Under The Members of Parliament (Remuneration and Allowances) Order, 1973, MPs are currently allowed to import one car duty-free during their tenure.
This includes exemptions from customs duty, VAT, supplementary duty, and advance tax.
For general importers, the total tax burden on similar vehicles can reach 400%–500%, a major example of inequality in the tax system.
Past controversies and failed attempts
The duty-free car facility was first introduced during the Ershad government. Despite repeated criticism over the years, it could not be effectively abolished.
Efforts in the last fiscal year also failed, as the proposal included in the budget was later dropped from the Finance Bill.
It is notable that after nearly 36 years of full duty-free benefits, a proposal was made in FY25 budget to partially withdraw the facility. This marked the first attempt to alter its structure.
In 2024, the move to reduce benefits was driven by conditions tied to loans from the International Monetary Fund (IMF).
On June 6, 2024, then finance minister Abul Hassan Mahmud Ali proposed limiting the benefit while presenting the budget in parliament. His proposal recommended imposing 25% customs duty and 15% VAT. However, it was not approved due to objections from MPs.
This time, the context is somewhat different.
Both major political parties have announced decisions to forgo the benefit, increasing the likelihood of implementation. Relevant sources said some amendments to existing laws are required to fully abolish the facility.
In this regard, National Board of Revenue (NBR) chairman Md Abdur Rahman Khan told Dhaka Tribune that exemptions in various sectors have been gradually reduced since last year. However, a political decision is needed first to abolish duty-free car imports for MPs. If a positive decision is made, steps will be taken in the upcoming budget.
Through a notification issued on May 24, 1988, the then government introduced full exemption from all duties and taxes on car imports for MPs, which has remained in force for decades.
During the 2007 caretaker government, reports of various irregularities regarding this facility surfaced. Although an attempt was made to abolish it through an ordinance, it was not fully implemented. Later, in 2009, the Awami League government reinstated the benefit.
Up to Tk5 crore evasion through a single car
The issue has resurfaced as importing a single car under this facility can allow evasion of Tk5 crore to Tk10 crore in duties, according to sources.
NBR officials said that for high-end luxury vehicles, the combined import duty, supplementary duty, and VAT can equal or exceed the vehicle’s price.
As a result, a single duty-free import allows an MP to avoid a substantial amount of revenue.
Economists say this benefit is not merely a personal privilege but has created structural inequality. While ordinary citizens must pay large taxes to import similar vehicles, public representatives enjoy complete exemptions.
Sources also said there have been allegations of misuse in the past, particularly involving ownership issues, usage purposes, and indirect profit through resale.
According to NBR sources, from January 2009 to April 2024, a total of 572 vehicles were imported duty-free. While their total customs value was about Tk397 crore, the revenue loss due to tax exemptions was at least Tk5,147 crore—around 13 times higher.
After the dissolution of the 12th parliament, the NBR decided not to release around 30 duty-free vehicles.
These were later transferred to the vehicle pool of the Ministry of Public Administration.
The total unpaid tax on these vehicles was about Tk269 crore, with each vehicle carrying tax liabilities between Tk8.62 crore and Tk 9.44 crore.
Later, attempts were made to auction these vehicles under the Customs Act, 2023, but expected bids were not received.
Political and policy significance
Analysts say the decision should be seen as a “policy turning point.” It sends a clear message that public representatives can move away from the culture of special privileges. It may also help establish equality in taxation, protect state revenue, and rebuild public trust.
In the new 13th parliament, BNP-elected MPs will not take duty-free cars or government plots under official benefits.
BNP media cell member Shairul Kabir Khan said the decision was taken at a party meeting after taking oath.
Meanwhile, Jamaat-e-Islami Ameer Dr Shafiqur Rahman said their MPs would not accept duty-free cars or plots under any circumstances. He said they consider politics a responsibility, not a profession.
