Car market heating up before day dawns on tax increase

07:20' 15/04/2008 (GMT+7)
VietNamNet Bridge – Buyers are rushing to car salons these days, trying to purchase cars before the tax increase comes into effect.
Since local newspapers reported that the Ministry of Finance was consulting with relevant ministries about the tentative tax increase to 80-85%, people have been rushing to buy cars for fear that car prices will increase.
Most of the car sales agents in Hanoi say that the number of clients has increased sharply by 50% these days as they have heard about the Ministry of Finance’s plan to raise the tax. The salesmen here say that most of the clients seeking to buy cars now are individual clients, while there are few clients buying cars for state agencies. Explaining this, the salesmen said that only clients who have to pay for cars with their own money feel bad about paying more money.
“It remains unclear when and how much the tax will increase, but it is certain that the tax increase will occur. If I do not buy a car right now, I will have to pay tens of thousands of dollars more for a car worth over $100,000 in the future, when the decision on the tax increase comes into effect,” said the owner of an electronics company in Hai Phong city.
The most impatient clients are those who plan to buy luxury models. It is because the more luxurious the cars, the more additional money buyers have to pay.
Meanwhile, sellers do not intend to sell cars in big quantities at this moment, while they tend to limit sales, and will only sell later, when the decision on the tax increase become effective.
“Two months ago, if you called a car agent and said you wanted a car, the seller promised to deliver the car you wanted very soon and give you a valuable gift. But if you want to buy a car now, you will be told that cars are now very scarce,” a client, who was at T.L salon on Nguyen Van Luong street, said.
If a company imports 40 cars which have the taxable value of VND12bil now, they will have to pay the total tax of VND8.4bil (70%). Meanwhile, the tax they have to pay when the tax rate is raised, for instance, to 80%, will be VND9.6bil. If delaying the sale of 40 cars, the importer will be able to apply the new sale prices, higher than the current price, while they still have to pay the current tax rate. That explains why car importers are ready to pay high fees for storage, and do not intend to boost sales now.