New vehicle policy promised to angry car traders
Published:Wednesday | November 10, 2010 | 12:00 AM
Members of the motor-vehicle trade are hopping mad over the existing rate of import duty on their vehicles coming through the wharves, and they are demanding a new tax regime that will help breathe life back into their depressed businesses.
They also want a rollback of age limitations on imported cars and trucks.
In response, the Government says a new motor-vehicle import policy, which should address the concerns of the traders, is on its way.
Cabinet members are expected to have the policy document in hand in a week or two, permanent secretary in the industry, investment and commerce ministry, Reginald Budhan, told Wednesday Business.
And a meeting with industry representatives is expected to be held after the Cabinet deliberations.
Both Industry Minister Karl Samuda and Commissioner of Customs Danville Walker were no-shows for a recent forum held to discuss issues affecting the motor-vehicle retail industry.
Walker was said to be overseas, but the minister earned the ire of stakeholders in attendance after Budhan, his stand-in at the function, said Samuda's absence was strategic.
Industry players were very critical of the existing policy and called for its revision, noting that the current regime was proving to be an obstacle to the trade.
"The reality is, if the current situation does not change within another four to five months, with the Government making the necessary adjustment, I certainly cannot see a bright future for the industry, and I am absolutely sure that many dealers will have to fold," said Lynvalle Hamilton, president of the Jamaica Used-Car Dealers Association (JUCDA).
Extend time frame
JUCDA wants a policy that allows the importation of cars up to seven years old and pickups as old as 10 years. The existing policy bans the importation of motor vehicles that are more than three years old.
"If you come to our lots and find that cars are expensive, don't for a moment think anything else other than they are expensive because of government policies," Hamilton said, noting that high car prices were reflective of the high rate of duty applied.
Another group, the Automobile Dealers Association, is backing the call for a duty reduction. Its members point out that the Government currently collects between 65 per cent and 179 per cent in duties on each vehicle. On the largest category of vehicles imported, that is, those with between 1600cc and 2000cc, the duty rate is 116 per cent of the CIF value.
Need for a boost
The trade reports that in 2008, about 6,070 new vehicles were sold.
However, the number fell to 3,523 last year, and up to September this year, only 2,206 vehicles had left the lots of the ADA members.
"The new-car dealer needs a boost," said ADA chairman, Kent LaCroix,
"Small profit, large turnover, this wisdom and philosophy works," he said expounding the position for lower customs-duty rates.
LaCroix said lower taxation will encourage efficient movement of goods and services leading to a stimulation of the productive sector and increased job creation.
"Our government promised a tax system that is simple and competitive - a simple business-friendly bureau-cracy," he said.
The industry in which he operates, he pointed out, wants to be the vehicle that starts the process of tax reform.
But Budhan has made it clear that there is no duty reprieve in the coming motor-vehicle policy.
"This policy does not speak to duty," the government official told Wednesday Business.
"The Ministry of Finance will speak to things like duty on different engine sizes at the appropriate time," he said.
Neither is customs representative Florence Howe, the director of internal revenue, holding out much hope to the low-duty campaigners.
"There is absolutely nothing that we can do about the import duty that is charged on the vehicle," she said.
"The Government applies the general consumption tax, the SCT (special consumption tax), the user fees and all of these things, so if we must look at changing the duties applicable, we would have to look at these other taxes, but they too have to assist in other areas," she added.
The yet to emerge new policy promises some review of the issues that irk the motor-vehicle traders, such as the permissible age of imported vehicles, a matter the ministry's Budhan said will be left to the minister to speak on.
"There are some things in the previous policy which the minister will speak to in this (new) one, such as heavy-duty equipment and how those will be treated going forward," Budhan told the Financial Gleaner.
He added that issues pertaining to spare parts which dealers have to maintain, as well as documentation, will be addressed in the policy.
"There are some deficiencies in the current policy, which we are trying to fine-tune in the new policy," he noted.
He noted too that the policy will address all motor vehicles.
However, two other areas the document is not expected to touch include limitation on the number of imported vehicles and hybrid cars.
"There is no limitation, so the Government does not have a quota system at the moment," said Budhan.