Car Tax Rollback?

The recent decision of the government to reduce the import duties on cars in an effort to stimulate the economy is a poor one to say the least.  The theory behind the decision is that the reduced taxes will lead to lower car prices and thus encourage persons to buy more cars.  This may sound good in principle but the reality will be far different.

The group that stands to benefit most from this decision is the used car sellers.  This is the group that for many years went to Japan to buy used cars and brought them to Jamaica and sold them at huge profits.  The current situation is that for the last three years at least it has not been practical to buy used cars from Japan. This is because the eastern European countries drove up the price of used cars so that they were almost the cost of new cars.  Despite this situation, some used car dealers went and bought more cars which of course they could not sell.  Many of the cars on the wharf are luxury vehicles that were imported to sell to persons who were getting significant income from Cash Plus and Olint.  That was a market that was unsustainable just as is the high end luxury apartment complexes that were built.  The tax payer is now being asked to assist these persons many of whom ripped us off in the past.  In addition it will lead to more congestion on the roads, more need for foreign exchange and lees reliance on public transport.

The price of cars will not fall for several reasons, firstly they will claim that the cars were bought when the dollar was 70 to one and with the new exchange rate the price of the car must increase.  Secondly, the claim will be made that the storage costs of having the cars on the wharf for so long needs to be recovered or will ask that it be waived resulting in more lost revenue for the government.  Additionally, there are persons who have paid full duties on their cars and in order not to put them out of business they will price their cars accordingly.  Lastly and most importantly our private sector has shown consistently in the past that when they receive a benefit from government it does not get passed on to the consumer but instead goes into their own pockets.

This decision is simply unbelievable given our situation; the government should either have considered using the “cash for clunkers” model or auctioned the cars in an effort to obtain the custom duties due.  This decision is like an individual asking his employer to reduce his salary by 15% so that he can better manage his expenses.

Feedback Question:  Would “cash for clunkers” be a better choice for Government.