Rent-a car firm defends duty waivers to sector
Published:Friday | September 10, 2010 | 12:00 AM
Even as the Government has put the brakes on a range of waivers and tax concessions to various industries, companies and individuals, pending a comprehensive over-haul of the policy, the head of one car-rental firm is putting up a stout defence of the preferential treatment of the sector in which he operates.
For Michael Campbell, the chairman and managing director of Island Car Rentals, it is not simply a matter of the sector getting allowances from the State.
The Government, he said, is reaping greater benefits from granting special treatment in the form of lower motor-vehicle import duties to the sector.
He has maintained that the concessions, of which his company received J$166 million worth last December, resulted in greater levels of business that translated to a higher take in General Consumption Tax and Special Consumption Tax for the Government's coffers.
According to Campbell's calcula-tions, with the improved business the sector normally does in the months of the winter tourist season, the return to the Government was in the region of between 450 per cent and 500 per cent on its investment in terms of duty concessions to the sector. This, he said, compared favourably with what he estimated to be a 350 per cent return on the dollar for every Government concession made in the last half-decade.
Campbell said he is now putting together data to support his claim.
"To get the concession from the Government in the first place, what we had to do was prove that it was not lost revenue," he told the Financial Gleaner.
Government import concessions to car-rental firms involve a complex licensing process, which includes inspections by the Tourism Product Development Company. Car rentals pay a 30 per cent duty on imports, a level which is some 10 percentage points below the duty paid by other importers of motor vehicles.
But Campbell has described the duty benefit as more of a tax shelter, which shifts taxation to the back end, where he contends, it ought to be.
Cutting concession, he said, would mean a smaller take for the Government as motor-vehicle financing is fixed and higher charges at the ports would mean fewer cars being brought in. Higher costs, he said, would also affect the viability of the industry, which he noted is highly price sensitive.