Ha Noi (VNA) – Car prices across the nation may go up after a surge in car imports during January, prompting the government to consider raising import tax on imported cars and spare parts.
The Ministry of Industry and Trade reported that in January alone, the imports of complete built units (CBUs) surged 421 percent year-on-year with 3,000 units imported into the country at a total value of 49 million USD.
According to Tan Son Nhat International Airport’s customs, more than 53 CBUs were imported into the country through the airport last month, up from only 24 units for January 2007.
The volume of imported spare parts has also increased substantially. Automobile dealers imported at least 100 CBUs a day by sea and 200 sets of spare parts were imported by domestic automobile assembly companies.
To deal with the increase in imported cars while infrastructure remains poor, the Prime Minister has asked the ministries to draw up suitable tax policies aimed at reducing traffic jams, which have become more serious in the nation’s major cities during the past few years.
An official from the Ministry of Industry and Trade revealed that some ministries have suggested that the import tax should be raised by 3 percent, while others called for the previous tax rate of 70 percent.
Some car import companies have affirmed that the draft tax policy has been completed and will be submitted to the Prime Minister soon.
Raising the tax on car imports is considered one of the five most important measures towards the goal of reducing traffic congestion, and it is expected that the new tariff on car imports will be applied within the first quarter of this year.
It remains unclear how high the new tax rates will be and which kinds of vehicles will be subject to tax increases.
Car importers have warned that once the new tax is instituted, prices will go up. Meanwhile, customers who have heard about the possible tax increases are rushing to buy cars in anticipation of tax and price hikes.
Importers said that the number of people buying cars is increasing sharply and many are ready to pay in advance.
Nguyen Thi Vinh, Director of Hai Phong-based Vinh Hoang Company, said that she does not dare to accept payment in advance, because she fears that the decision to increase the import tax may be released before the imports arrive, resulting in losses for her.
Car dealers say that if the import tax increases by 3-10 percent, car prices will likewise increase by at least 500 USD per unit.
The news about the possible tax increases is welcomed by local automobile manufacturers, because imports will become less competitive in the domestic market.
At the end of 2007, an imported Camry 2.4L was priced at 51,000 USD, the same price as a domestically assembled car of the same model. If the tax rate is raised by 3-10 percent, the car price will rise again to 55,000 USD per unit, and be unable to compete with cheaper locally-made cars.
In 2007, Viet Nam cut the car import tax rate three times, from 90 percent before Viet Nam became a WTO member, to 80 percent in mid January 2007, then to 70 percent in mid 2007. Two additional tax cuts were implemented within three months, and now the tax rate on brand new car imports is 60 percent.-Enditem
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