Less than a month after the Government reduced the Special Consumption Tax (SCT) on new imported motor vehicles by 20 percentage points, local dealers are demanding more.

Chairman of the Automobile Dealers Association (ADA), Kent LaCroix, said while the group was appreciative of the Government's current 'incentive package' a "63 per cent across-the-board reduction in the duty would be ideal".

The five-time chairman of the association, who was speaking at a media conference at the Liguanea Club in St Andrew last Thursday, said that dialogue with the government is ongoing and there are plans for a possible meeting next month.

"The ADA has been in ongoing dialogue with Government to secure a reduction on duty rates, which have been as high as 180 per cent on some vehicles," said LaCroix.

He made the point that the "incentive package" was late in coming and the government's decision to put it in place at this time was a case of "enlightened self-interest", since it benefited directly.

tax revenue

"The more than 50 per cent downturn in sales in the auto industry over the past year has resulted in a decline in government tax revenue in excess of $1.6 billion, compared with the corresponding period the previous year," LaCroix said.

"... It was the realisation of the magnitude of the revenue loss caused by the downturn in sales which ultimately influenced Government's decision to lower the SCT on motor vehicles," he continued.

The chairman explained that under the new 'incentive-driven' arrangement the same vehicles which resulted in the shortfall of revenues for the government last year will see a net amount of roughly $1.2 million flowing into Government's coffers from the sale of each vehicle for which the landed cost is $1.42 million.

The chairman sought to set the record straight that "scarce foreign exchange" was being used to purchase motor cars.

"The new duty regime applies only to vehicles that landed before September 11 and are, therefore, already in the island in bonded warehouses," he said.

"ADA members currently have 1,100 vehicles in bond - approximately 600 of which are available for purchase," he continued.

LaCroix noted the association was puzzled as to why motor cars continued to be seen as "luxury" purchases in a country where public transportation was not at a "consistently adequate level" islandwide.

high duties

"Genuine luxury vehicles - that is, those above 3000cc - are neither imported nor sold in significant quantities because of the very high duties they attract," he said.

The chairman revealed that the six vehicles with over 3000cc rating sold this year were purchased by persons in the diplomatic corps or persons with government duty concessions. This, he said, proved that "the higher the tax, the greater the disincentive for consumers to purchase vehicles with high cc ratings".

The ADA comprises 20 new-car dealers which represent 22 manufacturers.

On September 9, the Government slashed the SCT on vehicles 1600cc upwards and dubbed the move a "motor vehicle stimulus package". Under the programme, vehicles which attracted SCT of 10 per cent were zero rated. The SCT on high-end vehicles was also reduced from 70 per cent to 35 per cent.

- Shernette Guillespie