By Edward Layne

The recently-announced plans by the A Partnership for National Unity/Alliance For Change (APNU/AFC) Government to significantly reduce the excise tax on the importation of new vehicles in an attempt to encourage more people to purchase brand-new vehicles as opposed to used, will bring little or no real benefits to low-income and middle-income earners, based on price comparisons made by this publication.
According to most auto dealers, the average Guyanese who buys a car will go for the low end foreign-used Toyota motor car – Allion, Premio, Avensis, and Verossa, etc, which is sold at an average of $3.1 million including taxes.
However, the same vehicle, if purchased new, will cost a whopping $11 million with tax, including import duty, and about $6 million duty-free.
As a matter of fact, checks at several local auto dealers show that the two cars that are purchased the most by average Guyanese are the Allion and Premio.
A foreign-used Toyota Allion is $3.1 million with duty and $2.1 million duty-free, while a Toyota Premio is $3.2 million with duty and $2.1 million duty-free
The same Allion and Premio if purchased new will cost an average of $10.5 million with duty and about $6 million duty-free.
It is important to note that the Government promised a reduction in the taxes on new vehicles and not a removal, thus to purchase a new Allion or Premio, the buyer would have to pay more than the average $6 million, almost double the price for a foreign-used car of the same specifications with duty.
One auto dealer who spoke with this publication on the condition of anonymity said that the proposal was absurd and would not benefit low-income and middle-income earners.
“The average man who buys a car, in majority of the cases, would do so through accessing a loan from one of the local commercial banks, and he or she is barely making it to qualify for a $3 million car, then how will that person be able to qualify for let’s say a $6 million loan for a new car? This proposal is not well thought-out and will only deny the poor people a chance to own a vehicle. There should be greater thought put into this,” the dealer said.
Another dealer said that the proposal, if implemented, would benefit only the middle and upper classes of the population, since Guyanese lower down the economic ladder did not buy and could not afford a new car.
“This proposal as they are said to have drafted is just laughable, because who you think will benefit? It’s the rich people, because which man who is working as a public servant or operating a small business will be able to buy a new car?” he questioned, “ It’s an upper-class decision which will kill the auto industry in this country.”
The dealers are urging the Government to review its proposal, since it would significantly affect not just used-vehicle dealers, but also the poorer section of the population, who were currently enjoying the benefits of owning a vehicle.
One dealer proposed that the Government engaged stakeholders in the industry so that their suggestions could be incorporated into any proposal to adjust the taxes on both new and used vehicles.
Another dealer proposed that the Government regulated the industry so that only used vehicles that met certain criteria were imported and not ‘any and everything’ as was being imported by the many “bottom-house” dealerships popping up around the country.
It was also suggested that the Government put systems in place to restrict vehicles of a certain age from entering the country, for example, allowing only cars that were built in 2005 to present into the country.
This, the dealer said, would increase the number of “newer” cars on the road.
Guyana Times first reported that the Government was already in possession of a raft proposal on the new rates and more information would soon be announced publicly.
The source was unable to confirm whether Government would be moving to increase the excise tax on imports of used vehicles.
President David Granger had previously stated that used vehicles had created many problems in society and had contributed tremendously to the road carnage in the country.
“Many of those vehicles being imported are being discarded by states that have proper safety regulations, many of the tyres that we use on our vehicles are being discarded by people who know they are unsafe, but we are so happy to get cheap handed-downs that we don’t realise that we are jeopardising the safety of our citizens,” Granger had reasoned.
He maintained that second-hand vehicles had a whole host of problems and should not be allowed to enter Guyanese markets.
“People must be discouraged from buying junk,” Granger insisted.