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New tax system to boost vehicle sales: Business leaders
Business operators have welcomed a new government policy that will allow vehicle purchasers to pay the excise tax in annual payments instead of as a lump sum, saying this will boost sales. However, they are not sure how the government will implement this policy and believe it won't be easy for the authorities to ensure that purchasers pay the full amount of vehicle tax owed.
Car dealers made the comment yesterday after the National Assembly approved the policy, which was proposed by the government in the belief that lower tax payments would stop people from evading the payment of taxes altogether.
Under the revised Law on Tax, the government will impose excise tax rates that range from 25 to 150 percent of the basic vehicle purchase price, depending on type and engine size. The new excise tax rates will be higher than previous taxes, which ranged from 10 to 90 percent of the basic vehicle price.
Lao Automotive Association President, Mr Saneu Chounlamany, said the new system of tax payment would enable many Lao people to buy a new vehicle because they would not need to pay a large amount of tax all at one time.
“It's good news for business, as it means vehicle dealerships won't have to pay the excise tax in advance,” he said. Under the present system, dealers must pay the vehicle tax themselves, before adding it onto the sale price paid by the consumer.
Mr Saneu also said the new system would make it easier for middle income earners to buy a car, which is becoming an increasingly important possession for city dwellers.
But Mr Saneu said that while he supported the move because it was good for business, he could not see how it would work in practice.
He said it would not be easy for the authorities to collect the excise tax through annual payments. For example, what would happen when a person sold a vehicle only a few months after purchase, and how would the authorities collect the tax if a vehicle was damaged in an accident.
The government will never collect the tax if the vehicle is badly damaged because the owner would never put in on the road again, he said.
Other questions have arisen about who will monitor the payment of the tax by vehicle owners. At present, the traffic police are responsible for checking that drivers have a vehicle licence, a driving licence and have paid their road tax.
Some drivers pay a bribe to the police when they are stopped and cannot produce the proper documents, raising concerns about whether the new system would actually reclaim vehicles on which owners failed to pay tax.
vientiane times
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