Plan to cut tax on new cars will boost sales by 28,000 vehicles, manufacturers argue
- The National Association of Automobile Manufacturers of South Africa has submitted a proposal to government, arguing for a cut in taxes on new vehicles.
- It wants the carbon tax to be suspended and the ad valorem tax reduced.
- Reducing the tax rate to 35% on new cars should boost sales by 28,000 vehicles a year, Naamsa believes.
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Reuters reports that car makers are petitioning government to lower the tax rate on new vehicles from 42% of the purchase price to between 35% and 38%.
The National Association of Automobile Manufacturers of South Africa (NAAMSA) has submitted a document to government which proposes that the carbon tax on new cars should be halted, and that the ad valorem levy should be cut.
Naamsa estimates that this could boost new vehicle sales by more than 28,000 units, and thereby boost tax income and create jobs, Reuters reports.
The carbon tax rate on new cars was recently increased and is calculated at the gram of carbon dioxide delivered per kilometre. According to a recent calculation by Car Magazine, the emissions tax on a new Polo Vivo 1.6 model would be almost R7,200.
Car manufacturers have been hit hard by a slump in local sales during lockdown, while vehicle exports so far in 2020 is 40% lower than last year.
Naamsa chief executive Mike Mabasa warned that without government intervention to boost local sales, car makers who rely heavily on export sales could find their South African operations become unviable, and exit the country.
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