Auto sector welcomes duty cut

Sheldon Williams, Gleaner Writer

Effective May 1, 2014, the Customs Duty and Special Consumption Tax (SCT) on some vehicles will be modified.

The changes, announced by Finance Minister Peter Phillips, will see the Customs Duty (Common External Tariff) rate on vehicles with engines of 2,000 cc and above reduced from 30 per cent to 20 per cent. The SCT rates will change by 10 percentage points on petrol or diesel vehicles with engine ratings over 3,500cc, and on hybrid vehicles.

Lynvalle Hamilton, president of the Jamaica Used Car Dealers Association, is in full support of the duty reduction.

"We definitely welcome the move and it will do more good than harm. Government right now is really in touch with what is happening. We have been really struggling to keep our heads afloat and we have been calling on Government to do something ... . We believe that this is a step in the right direction and this will help us or give us a fighting chance," Hamilton said.

"They are realising that there are high demands for these vehicles, and having those vehicles attract lower duties will move them off the lot," Hamilton added.

reduce rates across the board

Still, Hamilton believes the Government should have considered reducing the duties on all vehicles. "I would have thought they would have done it across the board - but, then again, there are certain restrictions that they are under, and it may be thought that if they put it too low the market might be saturated. Because if prices drop to a level it may affect the local market and we would see cars depreciating much faster than they usually do," Hamilton said.

Grouses of the used-car sector which were overlooked include the contentious model year mix-up and not being able to import cars over five years old.

Hamilton said: "Nothing is done from where we sit, and we believe that it is quite sad. It seems they have taken the approach where the consumer must go to court with the dealer. We believe if they had followed procedures, none of this would have happened ... You will soon hear a lot, because we have matters in the court."

Kent LaCroix, president of the Automotive Dealers Association, also lauded the duty reductions. "It's a good move. It is something we recommended, because we recognised that the higher vehicles were not really reflecting any high volume of units. We needed to stimulate the growth of that market, because many of them are becoming so fuel efficient," LaCroix reasoned.

"What we are trying to do is to stimulate the market and make more revenue for the Government; we are not trying to make less money for the Government."

He explained that if a reduction were granted to vehicles with engines below two litres, revenue targets would not be achieved. " We would end up reducing a market that has already been adjusted downwards," LaCroix said.