KINGSTOWN, St. Vincent – The St. Vincent and the Grenadines government says it intends to introduce measures that would reform the tax and tariff systems and allow for citizens to be better able to acquire new vehicles.
Downtown Kingstown, the capital of St. Vincent. (File Photo)Finance Minister, Camillo Gonsalves, delivering the EC$1.3 billion (One EC dollar=US$0.37 cents) budget on Monday night, said that the “one welcome reform to our tax and tariff architecture…has long been public discussion on the level of taxation levied on imported vehicles”.
Gonsalves told legislators that in some instances, the effective tax rate can be as high as 135 percent of the cost, insurance and freight value of the vehicle.
“As a consequence, the motor vehicle fleet on the island is on average 11 years old with an average total landed costs of EC$27,000,” he said, adding that the government is aware that it imposed a prohibition on the importation of cars older than 12 years old, and that the average age of a car in St. Vincent and Grenadines is 11 years.
“Only three percent of the fleet constitute newer models of less than 3 years old,” Gonsalves said, noting that the local used car market here is underdeveloped relative to neighboring countries.
He said that a local consumer is far more likely to buy a 12-year-old car on a Japanese website than they are to purchase one that is resold locally.
The Finance Minister said the government has listened to the concerns of both consumers and automobile retailers and undertaken its internal analytical work and is now prepared to address the issue.
“During fiscal year 2022, and very early in fiscal year 2022, the taxation regime for motor vehicles will be reviewed with the following objectives in mind: to incentivize the purchase of newer vehicles, to reduce the import taxes for hybrid and electric vehicles, and to restructure the surtax regime for all motor vehicles, including the prohibition on vehicles older than 12 years old.
“The result of these reforms will be to reduce taxation on all vehicles. But the greatest incentives will go to purchase newer vehicles and or cars with smaller, more efficient engines,” Gonsalves said, adding that the government is working on making the system easy to understand.
“We had an equation but it would be very difficult for the average consumer to follow. And in adjusting the existing online calculators so that purchasers will know what their final costs will be before they click buy on the website, these changes will be accommodated within the new harmonized commodity description and coding system HS 2017,” Gonsalves said.
He told Parliament that the Common External Tariff (CET) which will be implemented in this fiscal year will introduce classification headings for hybrid and electric motor vehicles.
“And we hope to increase the purchase of hybrid vehicles in particular, because purely electric vehicles don’t perform as well in hilly areas, without straight highways to recharge, as they do in some other locales.”
The debate on the budget is co9ntinuing.
