Susan Gordon, Business Reporter

Effective today, September 1, motor vehicle importers without bonded warehouses will have to pay upfront total aggregate import duty of 180 per cent on imported motor vehicles.

As the deadline neared, used car dealers rushed to comply.

The used car sector, which brings in some 13,000-15,000 cars annually, owes taxes of some $2 billion.

Industry sources say the average used car dealer sells 20-30 cars per month.

"There's a rush on at Customs as everyone is trying to get out the duty on the vehicles they have on the system before the clock strikes midnight," said president of the Used Car Dealers Association, Kenneth Shaw.

A new regime

The Tax Department will, as of today, implement a new regime requiring car dealers to pay all duties and GCT up front, replacing a system where they were allowed to remit a portion of the consumption tax after the vehicles were sold.

The 21-member Automobile Dealers Association (ADA), traders of new cars, is lobbying the Government to reconsider the change, saying it would push up their tax liabilities on their imports by as much as 150 per cent.

"As much as 90 per cent of customers obtain financing for their vehicles, and this tax regime will result in additional costs to them," said the ADA in a press advertisement this week that pointed out it was being penalised for breaches by others.

On Wednesday, Richard Stewart, chairman of Stewart's Auto Sales, a Suzuki dealer, said he anticipates his cars will sell for as much as eight per cent more.

"Paying a sales tax on a sale which is incomplete is a little bit uncomfortable for us," said Stewart.

Price to go up

"The price of motor vehicles will have to go up in the region of five to eight per cent given the fact that we have to increase our bonds."

Other car dealers expect a pass through of four to 10 per cent on their sales prices.

Those without the bonded facilities, which often include most of the used car dealers, will have to post a bond with cash or collateral equal to the total value of the import duty payable on the number of vehicles they have stored in warehouses, along with the GCT charges.

This means the importer who had the option of clearing an individual unit from a block, is now stripped of that option.

Winston Lawson, technical specialist in the Office of the Director-General for Tax Administration Services, said the measure was meant to force non-compliant importers to pay up their GCT.