By ROGAN SMITH
In a direct move to avoid "disadvantaging" car dealerships in The Bahamas, Prime Minister Hubert Ingraham, who recently faced a firestorm of criticism, yesterday announced a tax adjustment to car import rates a week after the steep tax hikes sent the already struggling industry into a frenzy.
The finance minister said he is confident that the adjustments will not compromise the government’s projected revenue in a significant way, but may actually enhance it. Mr. Ingraham led off the debate on the 2010/2011 Budget in the House of Assembly yesterday. Last week Wednesday the prime minister announced that a 65 per cent rate would be imposed on passenger vehicles with an engine of 2,000 cubic centimetres (cc) or fewer and an 85 per cent rate would be imposed on all other passenger vehicles and trucks. The government is now proposing to introduce a 65 per cent rate for cars that are 2,000 ccs or fewer; a 75 per cent rate for cars between 2,000 and 2,500 ccs and an 85 per cent rate for all other cars, except for hybrids, which face the lower duty of 25 per cent. This allows many fuel-efficient, 4-cylinder vehicles to be covered under a rate of duty that is mid-way between the low and high rates, Mr. Ingraham noted. Some of the cars that fall in the 2,500 cc category include the Ford Escape, Mazda, Acura, Honda Accord, Honda CR-V, Toyota Camry, Toyota Venza, Hyundai Sonata, Toyota RAV4 and the Ford Fusion. “These adjustments represent the only ones we are prepared to make in these days of sacrifice and service. They do not compromise our projected revenue in any significant way and may in fact enhance them,” he said. Following Mr. Ingraham’s announcement in the House last week some major car dealership owners and operators immediately canceled their international orders for larger engine vehicles, like SUVs. Others feared that their struggling businesses would eventually go belly-up. Days later Mr. Ingraham and his government consulted with the Bahamas Motor Dealers Association, which is made up of 15 dealerships. He said in one case officials from Friendly Ford Motors told him that they had no cars that would meet the standard. He said he was told that the tax hike would “be devastating to their business and employment.” Mr. Ingraham later told them that his government was prepared to amend the Tariff Act. The prime minister noted that it is “not the normal practice of ministers of finance to consult on tax measures” and said “it is not likely that any will ever do so.” “Notwithstanding, we are appreciative of the representations made to us by stakeholders, particularly given their full acceptance of the need to make some sacrifice at this time,” he said. “We make the adjustments without reservations because they still enable us to achieve the fiscal objectives we have set while at the same time affording all the best opportunity at survival, growth and continued employment and job creation for Bahamians.” The finance minister said the Bahamas must move towards importing more fuel efficient and environmentally friendly vehicles. “This makes good economic sense and good environmental sense. Small cars burn less fuel and save dollars. They are also more fuel efficient and release fewer pollutants into the air,” he said. Mr. Ingraham said he is optimistic that better days lie ahead for The Bahamas, that jobs will come on stream and the economy’s overall health and well-being will improve. “The process, however, will be slow going for the near future. This time provides us with a real opportunity to better prepare for those good times; indeed, it may help us usher them in. If we do not suffocate limited capital from the private sector by not sacrificing deficit spending today and if we take cuts today rather than act as if it is business as usual, we will better prepare for improved economic circumstances,” he said. “If we rise to this daunting occasion by accepting the need to sacrifice and serve the greater good of our nation, we can and will see better days ahead.”
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