The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AUTO dealers yesterday argued they could increase their used car sales by up to 30 percent if the authorities enforce a competitive ‘level playing field’ with roadside vendor rivals.

Ben Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Bausiness it was “hard to have fair competition when some of the people you are competing with are not playing by the same rules” as industry concerns grow over renewed growth in the number of roadside vehicle sellers.

While acknowledging the issue “has always been a concern”, he added that ensuring roadside vendors possess the required Business Licence and are paying VAT on their sales should be an “easy target” for a government eager to earn every cent it can given the unrelenting fiscal pressures it faces.

Noting that the crackdowns promised by previous administrations typically failed to materialise, Mr Albury joked that he and other dealers should maybe adopt the “if you can’t beat them, join them” mantra by closing their current operations and switching to “selling out of my back yard” alongside existing roadside vendors.

He spoke out after Bahamian auto dealers asserted that roadside vendors, and individuals importing directly from Japan via online purchases, are under-cutting them on price by up to 30-40 percent. They argued that this was not the product of fair competition but, instead, these vendors and individuals avoiding VAT and other taxes that formal dealers must pay to the Government.

Noting that this also undermines the Public Treasury’s income, Mr Albury told Tribune Business: “It’s funny you mentioned this. I was just driving down Prince Charles Drive recently and there were eight to ten vehicles parked there, flags out and set up like a side-of-the-road dealership.

“It is, and always has been, a concern. I wouldn’t say it’s any more or any less. These guys just open up shop. We encourage people to come into the industry, but it would be nice if they play the game the same as we do. It’s hard to have fair competition when the people you are competing with are not playing by the same rules....

The auto industry has long argued that roadside vendors are not subject to the same level of regulation and taxation as they are, thus placing them at a competitive disadvantage. VAT, Business Licence fees and National Insurance Board (NIB) contributions are just some of the levies they allege that the Government is missing out on as a result.

“The Government has been looking for revenue and loopholes in places where people have not been paying their fair share and any share. Period,” Mr Albury said. “I would think that this is an easy target. They’re constantly on us to make sure we’re doing it by the book. It would be nice if it was fairly administered.

“If you’re bringing in more than two vehicles per year, per person, you’re probably conducting a business and should have a Business Licence. All of us started somewhere. Bahamas Bus and Truck [his dealership] started as a car wash.

“We want people to get into the industry, but they should do it by the same rules, same taxes, same Business Licence as we have to and always have to. It would be good to know we’re not the only ones facing the burden. All we have asked, and have ever asked, is the Government treat everyone the same.”

Mr Albury said he has dealt with persons who purchased vehicles from roadside vendors that subsequently developed mechanical problems. With the sellers now unable to be contacted, he added that the buyer has “no recourse”, and asserted: “It’s not good for the consumer.”

The BMDA chief also recalled how he was contacted by a person in western New Providence complaining about a neighbour “running a car dealership next to his house. The whole yard was out on the street, people coming during the day to look at the vehicles, driving up and down. He’s got a nice house and this is going on right outside his door.

“I’d never be allowed to conduct business that way. But this is a major revenue source. If the Government got serious about going after these guys, I’m sure it could collect a lot of VAT, NIB and Business Licence,” Mr Albury added. “The more regulated they are, the better for the consumer as they can be sure they are dealing with legitimate operators.”

Arguing that previous administrations have failed to deliver on promises to address the proliferation of unlicensed, unauthorised roadside vendors, Mr Albury said: “It’s all over the place. I don’t think it would take a lot of intel to get to the bottom of it....

“It’s a sore point. The Government has not protected those doing it legitimately, paying taxes and high overheads to do so. Sometimes I wonder if I shouldn’t close up and start selling out of my back yard. If you cannot beat them, join them. I wouldn’t do that, but sometimes I wonder if I’m the fool.”

Brent Fox, Montague Motors’ principal, told Tribune Business that the Government needed to make arrangements with the major Japanese used vehicle exporters to levy and collect VAT on their sales on its behalf given that the point of consumption is in The Bahamas. Without this, he argued that many Bahamians avoid having to pay VAT on their online purchase - only incurring this when imported at the border.

“They’re selling high-priced items directly to the consumer and, in a lot of cases, they are selling to individuals importing five to ten cars who then sell them on the side of the road,” Mr Fox said. “They don’t pay Business Licence or VAT when they sell those cars.

“That enables them to sell the cars an awful lot cheaper than we can. They sell at my cost of landing, which is sometimes 30-40 percent cheaper than I can. It’s a serious issue. It’s nothing new, but it’s been pretty bad for the last three years.” VAT, though, only becomes due and payable once sales hit the $100,000 threshold.

Roadside vendors and Japanese used vehicle exporters will doubtless

argue that they are providing products that Bahamian consumers want - vehicles at an affordable price, and which are cheaper than those offered by formal dealers.

Mr Fox, though, said the 15-20 cars he brings in monthly pale in comparison to the estimated 400-500 used Japanese vehicles imported into The Bahamas every month. He added that himself and other dealers face “a double whammy” from roadside vendors and individuals purchasing direct from Japan who do not share the same taxation burden as himself.

“It’s increased tremendously in the last couple of years. These guys are not putting one or two cars out - at some properties they have six to eight, or ten cars lined up and little banners by the roadside,” the Montague Motors chief told Tribune Business. “You’ve got probably between half-a-dozen and a dozen guys doing that.”

“If there’s four to five dealers importing at my level, it’s still only a small fraction of what’s coming in. The majority of what’s coming in, the Government

is not getting VAT on the retail side and people selling them are not paying Business Licence or anything else. It’s gotten a lot worse.

“If I have to pay VAT on vehicles coming in, and when I sell them. Why shouldn’t they do that? They have an advantage over me. So many people are under-cutting this market and not paying their fair share. This is a significant money maker for the Government. They cannot say this is some guy complaining. They’re always strapped for cash,” Mr Fox continued.

“The Government is looking for every which way to make extra money, and this would be an ideal sector for them to focus on because there is so much abuse. I’m paying NIB for my employees, contributing to the system, paying taxes and the lion’s share is undeclared.”

Asked how much his sales would increase if the entire auto industry was subject to an even taxation and regulatory playing field, Mr Fox replied: “I think that sales could be, at a minimum, 30 percent better if there was more control over the industry. If it increases my sales 30 percent, the Government will get 30 percent more VAT out of me and make a heap load of money out of the car industry.”

Fred Albury, the Auto Mall’s chief, said of road- side vendors: “I guess everybody has to make a living. My concern is do they pay their taxes like everyone else? I think the Government has made an effort. If you bring in more than ‘x’ amount of vehicles in a year, then you are basically a dealer and need a Business Licence.

“That’s where it should work itself out if everyone does what they’re supposed to do. The Government’s Click2Clear, if everyone has that profile set up for imports, that will show if they are bringing in more than one, two or three vehicles a year, and that will give the Government some control over the matter. It’s difficult to stop it 100 percent, but I think the effort has been made.”