The ownership registration tax increases, plus the proposed yearly traffic fees on personal vehicles and cars have made all people unhappy. Manufacturers fear that their products would be salable, while car buyers try to dodge the laws to avoid high tax.
Do Xuan Quan, Sales Director of Nissan Ha Dong sale agent, said that the sales have been going very slowly after the Hanoi and HCM City local authorities made the decision to increase the car ownership registration tax and the number plate granting fees.
He said that in the past, when the sale went well, banks had to contact sales agents to ask the agents to introduce potential clients, who would borrow money from banks. Meanwhile, nowadays, sales agents have to contact banks to help buyers borrow capital, which can help them boost sales.
However, people are hesitant to borrow money now, because the consumer credit interest rates are overly high at over 21 percent per annum.
The car ownership registration tax has prompted people to “dodge the laws” to avoid the high tax. Buyers have been advised to register their cars in other localities, not in Hanoi or HCM City, under other names. Since the low registration tax is still being applied in other localities, the real buyers would have to pay lower tax, which help them save big sums of money.
Of course, the proposal by the Ministry of Transport has not been applauded by automobile manufacturers, because this will make the costs for car using increase.
The member companies of the Vietnam Automobile Manufacturers’ Association have expressed their worries about the business prospect in 2011. Right after the Hanoi and HCM City local authorities decided to increase the ownership registration tax, the Ministry of Transport has proposed to collect the yearly traffic fee on personal vehicles and cars that enter the hub of big cities during peak hours.
Choo Hong Chow, General Director of Nissan Vietnam, said that if the proposal is approved by the government, this, together with the higher ownership registration tax, would put a heavier burden on consumers.
“I know that the purpose of the fee collection is to get money to develop infrastructure. However, I have learned from other countries that the fee collection should come after the infrastructure development. Once the infrastructure conditions are good, it would be reasonable for the state to collect fees from personal vehicles,” he said.
Another automobile manufacturer has also said that they are facing big difficulties when drawing up business plans for 2012, because they cannot anticipate the possible changes in the government policies, especially the tax policies.
“The policies in the automobile manufacturing prove to be unpredictable,” said the representative of the enterprise.
Laurent Charpentier, General Director of Ford Vietnam, said on Tien Phong that the plan on collecting traffic fee should be implemented in a cautious way, in order to avoid shocks to people.
He said that in European countries, this kind of feel is usually collected through the petrol prices.
He has also expressed the worry that the fee collection would put a heavy burden on people, thus leading to the sharp falls of the car sales. Meanwhile, he has warned that this would not only badly affect manufacturers’ business, but would influence the national economy as well.
The government every year can collect a lot of money from auto manufacturers through tax collection. Therefore, if the revenue of auto manufacturers decreases, this would badly affect the government’s income.
“In Europe, there is a legend about a fowl that can lay golden eggs. However, if it has to bear too heavy burden, it would die, and no golden egg would be laid,” he said when talking about the possible impacts of the fees on the Vietnamese automobile industry.