Government today moved to Parliament to raise the chargeable value from $55,000 to $60,000 on motor vehicles, following complaints from car dealers that the recent hike in National Social Responsibility Levy (NSRL) had driven the cost of mid range vehicles out of the reach of ordinary Barbadians.
In tabling the Excise Tax (Validation of Tax) Motor Vehicles Bill in the House of Assembly this afternoon, Minister of Finance Chris Sinckler sought to assure that Government would still collect its share of revenues from the NSRL, which was increased from two to a whopping ten per cent on July 1 this year.
However, it is expected to result in an immediate lowering of revenues from excise taxes on motor cars even though Government expects to more than make up for the expected shortfall by way of higher sales of mid range vehicles, which, with the increase in the NSRL, were said to costing as much as some luxury range vehicles.
“So to avoid that effect the dealers and the Barbados Revenue Authority . . . said the way you adjust that, the way you avoid that problem is to move the chargeable value up from $55,000 to $60,000. So you change the band for the vehicle and allow then the landed value on the excise, in spite of the increase in the NSRL, to remain basically within the range of what we would call a mid-range affordable vehicle,” Sinckler explained.
“That, the BRA has advised, can be safely done without compromising any of the revenue . . . to the Government and interrupt any of the projections which we have made unduly. So having seen that, the Ministry of Finance said once we can get what we have projected to get, then we see no reason why we could not allow the chargeable value to go up from $55,000 to $60,000,” he added.
Pointing out that such a move was done in the past, Sinckler said it was never Government’s intention to dramatically increase the cost of vehicles by way of taxes.
The rate of excise on imported vehicles is calculated based on the chargeable value which is based on the cost of insurance and freight plus import duty, plus NSRL and Value Added Tax if applicable, plus the size of the engine.
Currently where the vehicle engine size does not exceed 1,600cc and the chargeable value is below $55,000, then the excise charge is 46.95 per cent. If the capacity is less than 1,600cc but the chargeable value is greater than $55,000 then the excise rate is 64.35 per cent.
“If the engine capacity is more than 1,600cc and the chargeable value does not exceed $55,000 the excise tax moves to 76.34 per cent. And where the engine capacity is more than 1600cc but less than 1800cc and the chargeable value exceeds $55, 000, the excise tax then moves to 93.7 per cent,” the Minister of Finance said, as he gave an idea of the taxes that were being paid.
“Finally, where the engine capacity is over 1,800cc and the chargeable value exceeds $55,000, the excise tax rate moves to 120 per cent,” he added.
The resolution, which was approved, also called for a validation of previous adjustments, which Sinckler pointed out were done under administrative order from his ministry.
“On investigation the Chief Parliamentary Council thought it was tidier and more legally certain to have this enshrined in legislation by way of effecting an amendment to the Act and adjusting regulation by way of order to ensure there be any avoidance of doubt and we agree,” he said.