The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is losing “massive amounts” of revenue on 75 percent of used vehicles imported into The Bahamas, one auto dealer is arguing, as he urged: “Go after the meat, not the potatoes.”

Brent Fox, Montague Motors’ principal, told Tribune Business that unlicensed used car salesmen/importers and Internet sales are causing the Public Treasury to miss out on potentially lucrative tax earnings as he urged Customs to enforce the two-vehicle per year limit above which auto buyers are considered dealers.

Suggesting that lack of regulation is helping to facilitate the used Japanese vehicle scam highlighted earlier this week by the Consumer Protection Commission, he added that his previous pleas for action from Ministry of Finance and Department of Inland Revenue (DIR) officials have produced no response.

Mr Fox told this newspaper: “I’ve already been down to numerous people explaining what’s going on. I went down to the Department of Inland Revenue and spoke to Shunda Strachan [the acting comptroller]. I’m telling her: ‘We’re struggling here. I’m paying bills off from years ago and trying to stay current with everything, and three-quarters of the cars coming are for people not paying Business Licence or VAT’.

“It’s crazy what’s going on. I can say about three-quarters of the cars coming in are for people doing that sort of importation. There’s maybe two dozen players bringing in five to ten cars each in addition to a lot of fraud going on. The Government is not collecting their dues on these cars. They are not collecting VAT on the sale and Business Licence fees.”

Mr Fox reiterated long-standing auto dealer concerns that they are being forced to compete on an uneven playing field against unlicensed roadside dealers, who pop-up at different locations offering multiple vehicles for sale at the same time, but paying no Business Licence fees, National Insurance Board contributions and real property taxes, or VAT on the sales transaction.

He argued that the Government is also losing VAT on online used auto purchases by Bahamians and only collecting the tax when they arrive at the border. “These people in Japan or around the world are selling cars into our market and they’re not paying any Business Licence fees in selling direct to consumers here,” Mr Fox added.

“I’m a Bahamian, and I have a right to have rights like everyone else. These people should not be allowed to operate in our territory without paying some sort of fee. I could be doing a whole lot better than I am doing now. I’m doing OK but could be far busier if the Government would address this. The amount of revenue the Government is missing out on, they really need to pay attention to.”

Getting online auto dealers, based outside this nation, to levy VAT on sales to Bahamian consumers and then remit the correct amount of tax to the Government is likely to be extremely challenging. Mr Fox, though, compared the situation to the agreements struck with the likes of Facebook and Amazon to collect VAT on purchases and advertising by Bahamians.

Describing the amount of tax earned from these arrangements as “minuscule” compared to what was being lost via online auto purchases, he added: “It’s amazing what they’re missing out on. Why would you not go after the meat of the situation rather than the potatoes? 

“The biggest amount of money spent on imports here is auto imports. If the Government was getting their fair share of that, there could be no telling what it may do for the deficit. There’s all kinds of things going on.”

As for unlicensed dealers and importers, the Montague Motors chief told this newspaper that some were likely involved in the scam identified by the Government’s consumer watchdog where persons were paying 50 percent of the purchase price upfront for a used Japanese vehicle only for the same auto to be sold to multiple other buyers while being shipped to The Bahamas.

“Those very people doing these frauds are already getting the lion’s share of the market,” Mr Fox argued to Tribune Business. “Seven hundred used cars came in last month. How many were there for Montague Motors? Maybe 20. Tell me who all those other cars are going to, and who’s collecting VAT? There’s a massive amount of money changing hands.

“They are bringing in multiple units, selling them on the side of the road and not paying their dues. Foreigners are also selling direct to retail and not paying any dues here. I do know that three-quarters of the cars coming into this country are coming in by what appears to be a single buyer.

“You’re not supposed to bring in more than two cars per year. Customs is supposed to be alert for that. How do 700 cars come in without raising a red flag with Customs? Two hundred to 250 probably went to established dealers. That leaves 500 other cars for the month. How many cars is that per person? Customs is letting that happen or not doing their job,” he added.

“If you bring in more than two cars you should be paying NIB, Business Licence, VAT. Government is not getting their revenue from unlicensed dealers. It’s flagrant and very widespread. I have nothing to hide. I’m paying all my taxes and Consumer Affairs comes down and checks my prices every six months.”

Ben Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Business that the authorities have “turned a blind eye” to unlicensed and rogue dealers operating “in plain sight” for “years and years”.

“All you have to do is drive around Nassau and see vehicles lined up on the side of the road,” he added, recalling one such location on Prince Charles Drive that was bedecked with flags to signal the presence of autos for sale. “You can go to any roundabout, any shopping plaza where these guys have vehicles lined up and are operating on the side of the road.

“I don’t know why a blind eye is being turned, but until we look at it and take it seriously it’s not going to change. There’s no sense going over and over. It’s years and years behind where it should be. I know the Government wants revenue and and wants people to be compliant. We’ve seen that through the exercises the Government has taken. But there’s things happening in plain sight and this is one of them. It’s very mind boggling.”