Auto

Taxation talks raise concerns

BY BRIAN BONITTO Associate Editor — Auto and Entertainment

Friday, January 18, 2013    

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JAMAICA'S new- and used-car dealer groups are expressing concern at the Government's indication that more taxes could be on the horizon.

On Monday, Dr Peter Phillips, Finance Minister, announced the Government would be seeking to increase its primary surplus from 6.3 per cent of gross domestic product (GDP) to 7.5 per cent in the next fiscal year which begins in April.

The Finance Minister also said a public sector "wage restraint" would be necessary for an International Monetary Fund (IMF) agreement to be signed.

Kent LaCroix, chairman of the new-car umbrella group Automotive Dealers Association (ADA), said while details of the Government's implementation plans are yet to be outlined, an increase in taxation at this time would have a negative impact on any industry.

"We are not aware of what the Government is planning on doing. However, any increase in taxes on the individual would affect any industry because the spending power of the consumer would be restricted or reduced. So, this is something that would affect everybody," said LaCroix, who represents 16 new-car dealers on the island.

"If taxes are increased, it is going to affect our industry and others as well," he continued.

LaCroix revealed that some dealerships depended heavily on purchases by the public sector.

"Depending on the dealership, the public sector accounts for 40 to 50 per cent of their purchases," he said.

In speaking with Auto in December last year, LaCroix -- who is in his ninth year in the driver's seat of the ADA -- said while the overall new-car sales last year were slightly above the previous year, there was a decline of 35 per cent between June and September in 2012. He attributed the downward spiral to the Government's hike in import duty on motor vehicles over 2,000 cc from 20 to 30 per cent on June 1, 2012.

At that time, the Government was trying to raise an additional $19.3 billion in taxes.

"Anything that may affect our business, we would naturally be concerned about," LaCroix said.

LaCroix's counterpart in the used car industry, Lynvalle Hamilton, shared his colleague's sentiments.

"If income is affected, it will negatively impact the buying power of the consumer. A significant portion of our vehicles are sold to the public sector," said Hamilton, president of Jamaica Used Car Dealers Association (JUCDA) and principal of Auto Channel.

The association comprises 65 members.

Hamilton said last year was a good one for the used-car sector.

"We're back to some semblance of normality," he said.

However, he is hoping that Government will not raise import duties.

"It has been proven that higher import duties translate to less revenue for the Government," he said.

For now, both men are adopting a wait-and-see approach to the discussions.

"We have not had any official word from Government, so we can only wait to see what unfolds," LaCroix added.

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