The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to increase the lowest auto tax bracket threshold from $10,000 to $15,000, on the grounds this would enable Bahamians to better afford more efficient, environmentally friendly new vehicles.

Fred Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Business that with the 65 per cent duty rate applying to vehicles costing $10,000 or less to import, his members “feared” Bahamians would be further pushed to used car imports.

And he warned it was “questionable” whether some Bahamian car dealers would be able to survive the Business Licence fee rate increases contained in the Budget.

Noting that the industry’s rate would increase, on average, from the existing 0.75 per cent to 1.25 per cent, Mr Albury, the Executive Motors and Auto Mall head, said he was currently assessing “where can we cut, where can we consolidate” in response to the increased tax burden.

Analysing the impact of the Budget’s changes to the auto industry’s Excise Tax structure, which once again base it on landed/imported cost as opposed to engine size, the BMDA president said smaller new cars were being placed tantalisingly out of reach of many Bahamians.

Suggesting that the duty structure be tweaked, Mr Albury told Tribune Business: “The lowest threshold of $10,000 does not allow consumers to get smaller, more efficient vehicles.

“If they were to bump that up to $15,000 and allow vehicles at that level and below to be at 65 per cent, you would see more people in smaller, newer vehicles.

“Our fear now is that consumers will be pushed into the used vehicles because of the price points.”

Under the Budget’s proposed Excise Tax structure, vehicles valued at less than $10,000 upon importation will be subjected to a 65 per cent rate.

Those with a landed cost of between $10,000-$40,000, which is virtually all of the BMDA’s inventory, will be taxed at 75 per cent, and high-end vehicles worth more than $40,000 subject to the highest tax bracket at 85 per cent.

Several dealers have suggested that the auto industry’s tax structure needed to be more nuanced, and Mr Albury yesterday expressed concern about the reforms’ impact when “coupled with the new Business Licence coming into play”.

He told Tribune Business: “There’s a few dealerships around town where it will be questionable as to whether they survive.”

The BMDA president noted that the sector’s Business Licence fee rate went from 0.5 per cent of turnover to 0.75 per cent in 2010, and the latest reforms promised an even greater rate of increase to 1.25 per cent.

“How much more can we take,” Mr Albury asked. “It’s not going to contribute to employment.

“I’m sitting here now twiddling my thumbs, trying to work out where can we cut, where can we consolidate? It’s an expense whether or not we make money.”

The proposed new Business Licence rates are as follows, and seem to be designed - at least where the Government is concerned - to protect small and medium-sized companies. Only their Business Licence fee rate is unchanged:

• Businesses with turnover between $500,000 - $5 million: 0.75 per cent

• Businesses with turnover between $5 million to $50 million: 1.25 per cent

• Businesses with turnover between $50 million to $100 million: 1.5 per cent

• Businesses with turnover greater than $100 million: 1.75 per cent.