Motor Vehicle Taxes

There has been a call by the auto industry for the government to consider reducing customs duties and taxes on motor vehicles because they are currently too high and contribute to more than half of the cost of the vehicle.  This they say will stimulate the auto industry and provide more jobs for Jamaicans.

I would agree with the industry that taxes are too high but this is not a simple matter to resolve.  If a country is to focus on economic development then it has to make informed decisions about the type of industries and businesses that it wants to promote.  The auto industry creates several problems that might prevent the government from complying with this request.

The first problem is that more cars results in more oil that has to be imported.  With the price of oil currently over $90 and rising, countries like Jamaica that have no oil and limited amounts of foreign exchange are having difficulties finding funds to buy oil.

In addition, emerging nations are entering into supply contracts for oil that may jeopardise our ability to obtain oil at all.  I would however be in favour of a reduction or even elimination of duties on fuel efficient vehicle especially electric cars.  A change in the tariffs to reflect the fuel efficiency of vehicles and not simply the cc rating would help to reduce our dependence on imported oil.  In fact, the cash for clunkers programme which focused on encouraging people to give up their gas guzzlers might work here.

The second problem that arises is one of infrastructure; if we have more cars then we will need more roads and more parking spaces for those vehicles.  Currently, our existing road network especially in urban areas is struggling to cope with the number of vehicles on the road.  This problem is compounded by the fact that poor enforcement of building codes has left very little room for the expansion of the road network.  Many roads cannot be widened without demolishing business places or houses of residents.

It seems to me that the real issue here is the means of transportation that we wish to employ in Jamaica.  In many major cities worldwide people do not drive into the city but rather take public transportation.  Herein lies the problem, the public transportation system in the city is inefficient and unable to cope with the numbers of persons who work in urban areas.

Improving the system would enable fewer persons to drive (I would be the first to give up my car) and would also lead to a reduction in the importation of fuel.  There are challenges to putting in place better transportation systems but these would be less than those associated with bringing in more cars.

If you had an efficient public transport system, would you give up your car or the idea of owning a car? Share your opinion.

Tags: Carl Wilson