The operations manager of an automotive dealership is claiming that the vehicle sector was "in the dark" over the government's decision not to reduce duty rates for vehicles sold locally, despite assurances from a government official that negotiations were underway.
Rick Lowe, operations manager of Nassau Motor Company (NMC), stated: "We're in the dark as to their reasons or understanding of why [the government] isn't in a position to reduce it... We're very concerned. If there's no policy that helps businesses increase sales, how long can you tread water?"
Lowe was responding to comments by Minister of State for Finance Michael Halkitis, who argued that the government is "not in a position" to reduce duty rates in the near future during an interview with NB12 yesterday. Halkitis reaffirmed that vehicles would not be receiving duty rate drops to coincide with and offset value-added tax's (VAT) January 1 implementation.
"We are not in position to do that at this time but there is a commitment, as we get more experience with the VAT when we get into the budget in May/June next year, (that) we'll be revisiting all of the duty rates, so we'll be doing that for automobiles as well.
"But the fact of the matter is that (because we are) coming down from 15 percent to 7.5 percent (VAT rate), we can't do the across-the-board duty reductions at the onset. We have to wait until we get some experience with the actual revenue," stated Halkitis.
However, he suggested that wider problems facing the economy are responsible for the automotive industry's sluggish performance.
"They have seen a reduction in the amount of new cars purchased since 2008. I think that's more a function of the economy and people being able to afford new cars. I think the fact of the matter is that Bahamians have moved to used cars.
"We will continue our conversation and there are some proposals we have that we want to speak about that would, in this interim period, make their operations a little easier, and we look forward to having those," said Halkitis.
However, Lowe, who also serves as secretary of the Bahamas Motor Dealers Association (BMDA), claimed that he was unaware of any such proposals and noted that Halkitis had failed to meet with representatives of the sector on several occasions.
"Minister Halkitis to date has refused to meet with us and we've also written the prime minister and he has not replied," said Lowe, noting that Financial Secretary John Rolle had stood in for Halkitis at all three previously scheduled meetings between the government and auto dealers.
In addition to the industry's unaltered duty rates, Lowe expressed his concern over the lack of specific information available regarding the upcoming introduction of VAT.
"As far as...any specifics, we haven't seen anything," said Lowe, adding that the limited documents he had received were general statements, which seemed to be designed to "confuse and obfuscate" readers.
Although several Guardian Business sources suggested that the government would try to minimize the impact of VAT on the vehicle sector and consumers, the most recent version of the legislation excluded all vehicles from its list of reduced duty items.
Over 100 other items, including cameras, refrigerators and various types of apparel, received duty rate reductions.
Lowe earlier claimed that the lack of duty reductions combined with the additional tax burden would bring the industry to a "tipping point", where there was no advantage to buying a car locally over importing one.
"The government has a lot of thinking to do. It's discouraging. I understand their predicament, but if you keep taxing everybody into oblivion they're only making their crisis worse," stated Lowe.

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