Parliamentarians', judges' car tax breaks remain

PUBLIC officials, including sitting MPs as well as members of the judiciary such as judges, will get to keep their car concessions.

Meanwhile the rest of the population will, from October 20, now have to pay all related taxes and duties that come with buying a new private vehicle, with no exemptions.

On Monday, in the 2021 budget read out in the Parliament, Finance Minister Colm Imbert said the importation of vehicles was one of the biggest users of foreign exchange.

The country, he said, spends in excess of US$400 million or TT$2.5 billion to import cars a year, at least two thirds of which were private vehicles. To stem that forex leak, government will remove all tax concessions on the importation of private cars.

“All private motor cars will now attract customs duty, motor vehicle tax and value added tax, with the lowest rates of duty and tax being imposed on hybrid cars, electric cars, CNG cars and small engine cars…to encourage their use,” Imbert announced.

Imbert, like all other MPs (both government and opposition) enjoys exemptions from paying VAT, motor vehicle tax (MVT) and Customs duties for the purchase of a vehicle.

Among several documents reaching the newsroom on Tuesday evening, was one addressed to the Comptroller of Customs which showed that a sitting MP who lives in west Trinidad purchased a Mercedes Benz in the latter part of 2019.

The document showed that the market price of this car was $810,570. A VAT exemption to the tune of $101,321.37; MVT exemption of $134,955 and Customs duty exemption of $218,556 were applied. This amounted to $454,833.27 in exemptions being approved for this one MP.

There are 42 MPs in the Lower House (House of Representatives) including government MPs, opposition MPs and the Speaker; 32 members in the Upper House (Senate) inclusive of the Senate President, government senators, opposition and independent senators. Every one of them enjoys the privilege of not paying VAT, MVT and Customs duties on cars they buy.

Other documents showed similar exemptions granted to other sitting MPs to buy new vehicles within the past year. It was announced in the budget that tax concessions will remain in place for commercial and industrial vehicles as well as public transport vehicles.

NO CONNECTION

In response to a question at the TT Manufacturers’ Association’s post-budget forum at the Hyatt Regency, Port of Spain, on Tuesday, Imbert said that exemptions for public servants who qualify will stand. Taxation on vehicles, he added, was a policy instrument used by Government for decades. Concessions for public servants were a separate issue.

“There are a number of travelling officers in the public service that get exemptions from motor vehicle tax duty, VAT, etcetera…Thousands of travelling officers in the public service…these exemptions have been in place for the last 20 years. There’s no connection between the two.

“There’s a particular group of travelling officers who get this as a perk, it’s an allowance. And then there’s the question of using taxation of motor vehicles as a policy instrument. So there’s no connection,” Imbert clarified.

Taxation, then, as a policy instrument, was used to either encourage or discourage car imports. In 2016, government allowed concessions on certain hybrid and CNG vehicles to encourage a move from petroleum-based fuel, he noted. This cost the State a loss in revenue of up to $450 million.

“We have decided this year that we want to slow down the importation of cars as being seven per cent of forex demand.

"Eleven per cent is food, so cars are right up there in terms of the amount of forex they consume. With reductions in the inflows in the energy sector, it’s a policy decision we have made,” he said. There was therefore no relation between concessions to public servants and a policy mechanism.

In 2017, an investigative report by TV6 news used documents sourced via a Freedom of Information request to the Parliament to show that from 2006-2015, parliamentarians received at least $29 million in vehicle exemptions – revenue foregone by the government.

And documents received by Newsday late last night suggested that government ministers have claimed exemptions in excess of $1 million over the last four years for  new vehicles.