The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian auto dealer yesterday described plans to lower Excise Tax rates by 20 percentage points on certain trucks as “a tremendous blessing”, telling Tribune Business his sales in this category had fallen by 75 per cent since the 2010-2011 Budget.

Andrew Barr, sales manager at Friendly Ford, said the Government’s move to reduce Excise Tax rates on trucks weighing 20 tons or less, from the current 85 per cent to 65 per cent, would boost that segment of the market “moving forward”.

And he also backed plans, as stated by Prime Minister Perry Christie in the House of Assembly yesterday, to “thoroughly review the entire structure of Excise Tax rates on all motor vehicles”, while still considering the traffic and environmental implications.

That will be ‘music to the ears’ of Bahamas Motor Dealers Association (BMDA) members, and both new and used car dealers, who have long argued that both the rates themselves - and their basis - needed a fresh look.

Apart from increasing the rates, the former Ingraham administration also switched the basis for assessing them from ‘landed cost’ to ‘engine size’ in the 2010-2011 Budget.

Auto dealers have argued ever since that apart from making auto purchases prohibitively expensive, placing cars out of reach of many Bahamian consumers and reducing their revenues/profitability, the resulting reduction in imports also lowered the Government’s tax take.

Ben Albury, general manager at Bahamas Bus & Truck, recently told Tribune Business that his sales would go up by a “conservative” 30-40 per cent if the Government switched the industry’s tax rates and structure back to the old one.

Mr Barr yesterday described the Government’s pledge to review the Excise Tax rates as “good news”, and a sign things were “heading in the right direction”.

As for the rate reduction for trucks weighing less than 20 tons, Mr Barr said: “For the future importation of trucks, it will be a tremendous blessing, as it will for anyone interested in purchasing those vehicles.

“The downside is that you have inventory in stock that you already paid 85 per cent Excise Tax on.”

Disclosing that Friendly Ford’s truck sales fell by 75 per cent after the tax rates were raised, Mr Barr added of the Government’s move: “I certainly think it’ll help tremendously moving forward.

“I can’t help but feel that is absolutely positive, and the correct thing that he is doing, reducing the duty on trucks and commercial vehicles back to 65 per cent. It will be a tremendous blessing for anyone in that truck market.”

In his Mid-Year Budget statement, Mr Christie said the Excise Tax rate reduction was intended to Bahamian-owned small businesses, and promote economic growth and job creation.

He was likely thinking of small contractors, landscapers and other businessmen, often self-employed, who rely heavily on small trucks and commercial vehicles to move their equipment and carry essential supplies.

However, while welcoming both the Excise Tax rate reduction and pledge to review the industry’s tax structure, another Bahamian auto dealer was more cautious, arguing: “The devil’s in the detail.”

Rick Lowe, operations manager/director at Nassau Motor Company, also noted that the new 65 per cent rate was higher than the old 60 per cent one.

“Hopefully it’s some positive news, hopefully it has some decisive impact, and hopefully they’ll have to engage the BMDA more,” Mr Lowe told Tribune Business.

“It could be very interesting, but until we know more details on what this means, it’s difficult to be positive or negative. Until we know the broader picture, I’m not getting ready to celebrate yet. The devil’s in the detail.

“But it’s nice to hear. When we find out where it is, hopefully they’ll engage the industry and be able to give us more certainty. We all have huge investments here, and need to make returns on our investment.”

And Mr Lowe added: “It’s alarming when you have to keep tweaking your tax system. Something’s wrong from the get-go.

“When you have to keep exempting this group and that group, it speaks to the dilemma this country is in.”

He said the Government needed to review taxes “on everything”, not just the auto industry.