After the recent budget announcement and the increases in import taxes on automobiles The Bahamas Motor Dealers Association were given an opportunity to meet with Prime Minister Ingraham to present their case.
Basically the vehicle import duty, or excise tax as it is now known, was amended from five categories based on the CIF price (cost, insurance & freight) to two categories based on engine size.
It is understood the governments intention, beside bringing the debt under control, is to get Bahamians to drive more fuel efficient vehicles. Both noble desires for sure.
However, to move the majority of vehicles sold by local new vehicle representatives from paying 60% import duty to 85% excise tax was a death knell for the majority of vehicles sold in The Bahamas by the various manufacturers, particularly in a declining economy.
Mr. Ingraham was most gracious with the BMDA members and requested data to help him look at our situation without making any promises in light of the tough economic times.
To his credit, he reviewed the request of the BMDA and yesterday announced that instead of two tax categories the government would facilitate three. They are:
1. 65% for vehicles powered by engines up to 2.0 litres
2. 75% for vehicles powered by engines over 2.0 litres up to 2.5 litres and
3. 85% for vehicles powered by engines over 2.5 litres and commercial vehicles
When the price of a vehicle is increased so dramatically, down payment requirements increase, payments increase and insurance premiums increase we remain concerned that these rate hikes will further slow the market for new vehicles.
These are the most difficult economic times I’ve lived through, and while I’m grateful for the rate change to slow the haemorrhaging that the 85% rate would have caused, by adding the new category of 75%, I remain convinced that increasing taxes at this time is not the right move for the economy overall.
At the end of the day, the private sector and taxpayers are being called upon to bear more of the burden they have been carrying for the past couple years.
Obviously, the Prime Minister has overwhelming concerns for the entire country so we all hope the best for the country.