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Auto dealers to get tax reprieve

By Brian Bonitto Associate Editor -- Auto and Entertainment bonittob@jamaicaobserver.com

Friday, April 25, 2014    

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JAMAICA's auto dealers are breathing a sigh of relief at the Government's recent announcement to roll back the Common External Tariff (CET) on motor vehicles 2000cc and up.

Kent LaCroix, chairman of the new-car group Auto Dealers' Association (ADA), said although his group has not yet seen an official document, it was a move in the right direction.

"We're quite pleased with what is done. It is a continuation of discussions with the Government which began a year-and-a-half ago," he told Auto.

Last Thursday, Dr Peter Phillips — Minister of Finance and Planning — announced a raft of new taxes aimed at raking in $6.6 billion to fund the bugdet. The proposal would see the CET being reduced from 30 per cent to 20 per cent, the figure it was two years before.

"The association worked hard with the Ministry of Finance and the Customs Department. We made presentations to them, with documents supplied by customs, and showed the benefits to consumer and Government if the duties were to be lowered. We showed them the higher the duties, the lower the revenue intake would be by the Government," he said.

In addition to the CET, dealers also have to pay 16.5 per cent GCT and Special Consumption Tax (SCT) which varies according to the type of vehicle.

In June 2012, the Government hiked the duty on imported vehicles with 2,000cc rating from 20 to 30 per cent as part of an effort to raise $23.4 billion. The move, however, resulted in a 35 per cent decline in new-car sales in June to September and a $2-billion-a-year gap in the Government's budget.

The sector, which employs over 5,000 Jamaicans directly and hundreds indirectly, was experiencing sputtering sales and, as a consequence, a dip in revenue for the Government.

LaCroix hopes the current readjustment will jump-start the ailing sector.

"This doesn't mean an onslaught of vehicles coming in the island. The economy is hard. It is a start, though," he continued.

Lynvalle Hamilton, LaCroix's used-car counterpart, lauded the Government for the reduction in CET.

"It is quite timely; we should be able to move some vehicles from off our lots," said Hamilton.

Hamilton, president of the Jamaica Used-Car Dealers' Association (JUCDA), said his group had written to the Government requesting a "fighting chance in this economy". He said consumers could see a reduction of $200,000 to $300,000 depending on cost, insurance and freight (CIF).

According to the Statistical Institute of Jamaica, the dollar has declined 14 per cent compared to its United States at the end of 2013. At the beginning of this year, it took $105 to purchase a US$1. Today, it costs $109.95 for the 'greenback'.

"The reversal shows the Government realises what is happening on the ground as it relates to moving the vehicles off the lots," Hamilton said.

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