Importers allege higher taxes on 85% of tyre market to benefit local manufacturers

Tyre importers, dealers and transport operators have urged the government to withdraw a proposed 20% supplementary duty on commercial vehicle tyres, alleging that the measure would impose a heavier tax burden on the import-dependent segment of the market while benefiting a small group of local manufacturers.

The demand was raised at a press conference organised by the Chattogram Tyre Tube Importers and Dealers Group at the World Trade Centre in Chattogram on Sunday (21 June).

Representatives from several transport owners' associations attended the event and expressed support for the proposal's withdrawal.

According to the organisation, the proposed FY2026-27 budget seeks to impose a 20% supplementary duty on commercial vehicle tyres under HS Code 4011.20.10. If implemented, the total tax incidence on such tyres would increase from 64.25% to 96.10%.

Presenting the group's statement, Joint Secretary General Saifuddin Ahmed said the measure would significantly increase import costs and ultimately drive up transportation expenses across the economy.

He claimed that imported tyres currently meet around 85% to 90% of Bangladesh's commercial vehicle tyre demand, while local manufacturers account for only 10% to 15% of the market.

"It is unreasonable to impose additional taxes on the larger market to benefit local producers who supply only a small portion of total demand," he said.

Saifuddin argued that tyres are an essential input for the country's transport and logistics sector rather than a luxury product.

"Trucks, buses, covered vans, pickups, agricultural machinery and industrial vehicles all depend on tyres. Any increase in tyre prices will inevitably raise operating costs and affect the wider economy," he added.

Responding to allegations of under-invoicing and tax evasion in tyre imports, group president Main Uddin said imported tyres are subject to 100% physical examination and valuation based on weight, leaving little room for duty evasion.

Transport operators attending the event warned that higher tyre prices would increase operating costs for freight and passenger vehicles, ultimately leading to higher transport fares and logistics expenses.

Akhtar Hossain, president of Eagle Paribahan, said increased transportation costs would directly affect consumer prices.

"Any rise in transport expenditure eventually translates into higher prices of goods for consumers," he said.

Morshed Hossain Nizam, senior vice-president of the Chattogram Prime Mover and Flatbed Trailer Association, described tyres as one of the transport sector's most critical operational inputs.

"Additional taxation on tyres will significantly increase business costs for transport operators," he said.

Metro Probhati Bus Service President Dulal said the public transport sector is already struggling with rising operational expenses and warned that further increases in tyre prices would inevitably raise passenger transport costs.

Mohammad Shamsuzzaman Sumon, port affairs secretary of the Inter-District Truck and Covered Van Owners Association, said higher transport costs would have a direct impact on supply chains and commodity prices.

Speakers at the conference warned of broader economic consequences, arguing that increased transportation costs would gradually raise the prices of agricultural products, consumer goods and industrial raw materials, adding further pressure on consumers.

They urged the government to reconsider or withdraw the proposed supplementary duty, consult stakeholders before finalising the measure and strike a balance between revenue mobilisation and market stability.

In his closing remarks, Main Uddin said the impact of the proposed duty would extend far beyond the transport sector.

"An additional tax on tyres will affect agriculture, industry and ordinary consumers alike. The government should review the proposal in the interest of controlling inflation and protecting economic activity," he said.