Association: Car sales to drop 30 pct once vehicle tax increased

The increase in the city’s motor vehicle tax may drive new vehicle sales to plunge by 30 per cent year-on-year in 2016, while small-scale companies may face closure, says Patrick Tse Ka Ming, president of the Macau Motor Traders Association.
This afternoon, the Legislative Assembly will discuss the bill increasing local motor vehicle tax in an urgent procedure as requested by the government, which suggests that legislators will vote on both the first reading and final reading of the bill today.
If the bill is approved, the average tax rate for a newly imported automobile will be increased to 40 per cent to 72 per cent depending upon the actual sale prices, compared to the current 30 per cent to 55 per cent. Meanwhile, that on motorcycles and scooters will range from 24 per cent to 50 per cent from 10 per cent to 30 per cent.
“Amid the economic downturn, sales of new vehicles have already dropped by some 20 per cent year-on-year for this year. We originally estimated that sales for next year would fall further by another 20 per cent. However, if the vehicle tax is increased, we expect the drop will increase by some 30 per cent,” Mr. Tse told Business Daily in a phone interview yesterday.
With business affected, the Association head said companies selling parallel or used vehicles may face closure in a worst case scenario.
“The industry does not plan to offer salary rises to workers next year given the current situation. We believe the implementation of the bill will even force small-scale companies to shut down their businesses, or to fire their employees,” he claimed.

Luxury sector most affected
The Association leader indicated that the high-end market will be affected most by the increase in tax.
“We should know that the high-end market, like the high-end jewellery market, has been suffering amid the downturn. The increase in vehicle tax will pressure the luxury sector even further. However, sales of entry vehicles that cost some MOP100,000 may not be affected that much as the tax growth rate is not that high,” Mr. Tse perceives.
The ultimate aim of the tax increase bill is to control the city’s vehicle growth at four per cent per year. In addition to increasing the tax rate for motor vehicles, the government recently announced its intention to increase road tax and tighten the regulations for mandatory vehicle inspection.
“In fact, from what we’ve observed, the vehicle growth rate has reached the government’s target this year amid the downturn. Hence, the increase in vehicle tax will only make our business more difficult,” Mr. Tse claimed.
“We think that the tax increase will only have a short-term effect. Most of the people planning to buy a car may have bought one already after the government announced the tax increase intention in the middle of the year,” he said.