By Demion McTair. Updated 5:30 a.m., Friday, September 23, 2022, Atlantic Standard Time (GMT-4).
A bill could be brought to Parliament as early as October 10 to introduce new changes to this country’s tariff structure for products, including motor vehicles.
At a press conference on September 22, Finance Minister Camillo Gonsalves said the draft bill revising the tariff structure for motor vehicles was reviewed months ago, “but the Ministry of Finance officials thought it would be best to wrap the changes in duties related to automobiles into a wider revision and reform of tariffs on other things”.
Earlier in January during his 2022 budget presentation, the finance minister had promised legislation to review the import duties on motor vehicles.
Responding to a question from ANN’s Asbert Williams at the September 22, press conference, Mr. Gonsalves said there will be a “significant reduction in duties” as the way in which vehicles are being assessed will be amended.
“We have reformulated the way in which the price of vehicles will be adjudged at the port,” he said.
He said: “Right now it’s just the age of the vehicle and the size of the engine,” referring to how vehicles are currently assessed. “We are adding some other factors to evaluate that, but the effect of it is that for new or newer cars there will be a significant reduction in duties,” he said.
The reduction in duties will also apply to “cars that are more efficient from a fuel standpoint, fuel efficiency or hybrid and electric, more efficient vehicles will also get a significant price reduction,” he said.
The current rate structure
In his 2022 budget presentation in January, Mr. Gonsalves had said that, in some instances, the effective tax rate for vehicles can be as high as 135% of the cost, insurance and freight value of the vehicle.
In his September 22, press conference, the finance minister said: “We did a lot of research and basically we have a cap on cars right now that are 12-years-old and most people are bringing in cars just a little fresher than the cutoff period.”
So, if it is a 12-year-old car, fellas are bringing in cars that are 11-and-a-half- years-old because that’s what they can afford given the tariff structure that’s currently in place.
The potential impact of changing the rate structure
“So, what we are trying to do now is to say that if you are the same young person or person, but it’s usually young people – the same person who has that 20,000 dollars that they got from the bank to buy a vehicle, if you still get that 20,000 dollars, instead of getting a 12-year-old vehicle, maybe now you’ll be able to get an 8-year-old vehicle for the same amount of money because we are going to adjust the taxes,” he said.
He said: “the hope is that on the top end, when we reduce taxes on new vehicles, more wealthy people will buy new vehicles so that we don’t lose too much money overall. So, we are reducing on the top and that will help fellas on the bottom as well.“
The finance minister said he is going to do a full presentation on the issue one the Ministry of Finance gives the final blessing on all the numbers.
He said the hope is that it will come to Parliament on the 10th of October.
“If it doesn’t come on the 10th of October, it will come whenever the November sitting of parliament is,” finance minister Camillo Gonsalves said.
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