– say taxation on imported commercial vehicles should be reconsidered
By Zena Henry
A number of local car dealers have registered a decline in business due to changes occurring
in the sector. The greatest change, they say, is the increased avenues where persons can attain a vehicle, but the most significant challenge may lie in the heavy import duty.
While the dealers agree that persons should have many options when shopping for their vehicles, they recognized that some private persons are using illegal avenues and short-cuts to infiltrate the automobile business. They say more persons are opening small sales agencies and “it is clear that they are not regularized.”
The dealers believe that not enough is being done by authorities to regulate the occurrences within the sector. They claim that local vehicle import duty for commercial purposes seems to lean on the side of “anti- business development.”
Kaieteur News was told that car dealerships like many other business support citizens by providing employment, yet they are made to pay more tax. This leads to higher vehicle prices and reduced profits which could affect the business’ operation.
“The larger the business, the more staffers are needed,” the Deputy Manager of Caricom Auto Sales, which is located in Lusignan on the East Coast of Demerara said. The manager explained that employment is provided for citizens, but if the company cannot manage, then staffers are likely to lose their jobs.
Caricom Auto Sales provides employment for six persons and currently growth is on hold since according to the operator, one has to consider competition with other services, prices, illegal operators and taxation.
Ambassador Auto Sales operating out of Queenstown, Georgetown, is not seeking to expand. The operator told this newspaper that the business environment does not seem conducive for growth. The proprietor told Kaieteur News that it is too expensive to import vehicles, so he would bring in vehicles based on orders and if not, he would import two or three vehicles, at the most, six times a year.
“I can’t fight up to grow in this business. I have always been small and it does not make sense fighting to sell two or three vehicles for couple thousand dollars when you have to spend millions to get it.”
The proprietor of Car Care Enterprise and Auto Sales on Hadfield Street, Georgetown, also expressed concern over vehicle import duties. The manager said that the company provides employment for many persons, but business can be very difficult when enduring heavy taxation and the continuous changes in the sector.
The heavy vehicle import tax on car dealers was described as “backward financial management.” The car dealer told the newspaper that more private persons are importing vehicles and buying online. However, legitimate car dealers are facing challenges as the sector evolves.
It was pointed out that in Jamaica, for example, the government has provided easy avenues for car dealers to conduct their business, because the importance of these companies within the economy was recognized.
The operators provide employment, the Car Care boss emphasised. He reiterated that the market has changed considerably and posited that it might be time to revisit taxation regulations.
According to the Guyana Revenue Authority (GRA) Excise Tax Regulations, based on the vehicle’s description and purpose, taxes have been applied. Under the heading 87.03 of the Act, tax for car dealers is outlined. This includes the Customs, Insurance and Freight (CIF) cost, 1.5 percent of that plus a flat rate of US$4,200, plus 10 percent of the rate. The rate to be paid changes based on the vehicle’s capacity.
Vehicle tax for private individuals is calculated in a similar manner, except they pay a flat CIF cost along with a percentage of the flat rate.
Shadow Public Works Minister, Joseph Harmon told Kaieteur News that taxation in the country continues to be a major burden for citizens. He asserted that Guyanese are the most heavily taxed people in the region and, “the vehicle importation tax is just an addition to the burden faced by consumers.”
He said the country’s heavy tax situation is one of the first areas that A Partnership for National Unity (APNU) is prepared to address when the coalition gets into office. He said APNU will also seek to make understanding taxes easier.
“Many people pay taxes and don’t understand why they are paying taxes and how they are taxed. It is too complicated. We believe the tax system should be made simpler for people to understand, so that there isn’t this one way for one person, and another for another person.”
The parliamentarian said it would make sense, however, to rethink taxation on car dealers, given their provision of jobs.
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