John Myers Jr., Business Reporter

Kent LaCroix, president of the Automobile Dealers' Association. - File

The Government's proposed increase in taxes on motor-vehicle imports has raised fears of a downturn in the automobile retail industry, whose members say the likely consequence will be a hike in automobile prices and less affordable vehicles.

"It definitely will have negative effects on the sale of motor vehicles and also as it relates to the price the consumer has to pay," said president of the Automobile Dealers' Association, Kent Lacroix.

That view was echoed by president of the Used Car Dealers' Association, Ken Shaw.

Finance Minister Audley Shaw, in his opening of the budget debate in Parliament last Thursday, proposed a stratified system of ad valorem taxes on imported vehicles, ranging from 10-70 per cent, depending on engine size. Diesel engines, however, would be get a 10-point reduction on the ad valorem tax for each category.

Shaw also said a limit would be applied to the 20 per cent concession that is given to government travelling officers towards the purchase of motor vehicles in order to give the government better control of the benefit.

"It is, therefore, proposed to limit this concession on vehicles to a CIF value of a maximum of US$25,000 and an engine size of 2,500 cc," the finance minister announced, pointing out that "if concession is sought on a vehicle in excess of US$25,000 and or engine size in excess of 2,500 cc, full duties become payable from the first dollar."

Paul Issa, deputy chairman of Motor Sales and Service and Euro Star Motors - representatives for Mitsubishi, Audi, VW and Mercedes Benz - argues that the new tax measure would hurt government revenues, saying it would make new cars less affordable.

Furthermore, he said the application of the special concession on the importation of diesel-powered cars would derive minimal or no benefit to dealers or the consumers, as it did not apply to cars with engine sizes over 3.0 litres (3,000 cc).

The special concession is not applicable to pick-ups or com-mercial vehicles either.

"Many carmakers put out diesel cars at the 3.2 litre engine size, which are more energy efficient than their gasolene counterparts," said Issa. "Under the proposed structure, this will mean that these vehicles will have a cumulative tax rate of 160 per cent, even with the 10 per cent reduction of the Special Consumption Tax."

The Jamaica Chamber of Com-merce has also weighed in.

President Mark Myers says the cost of cars with 2.0 litre engines or less, would likely rise 11 per cent as a result of the additional tax.

The motor vehicle retailers say they plan to take their concerns to Shaw, but are also to further outline their position at a press conference today.

john.myers@gleanerjm.com