By Neil Hartnell

Tribune Business Editor

nhartnell@tribunemedia.net

Auto dealers yesterday voiced cautious optimism that the government may today unveil budget changes allowing more models to qualify for the lowest duty threshold.

Rick Lowe, Nassau Motor Company’s (NMC) director/operations manager, told Tribune Business the industry was hopeful the benchmark at which vehicles attract the 25 percent duty rate will be increased from 1.5 litre engines to those with two litres.

The change, long pushed for by the Bahamas Motor Dealers Association (BMDA), would enable the benefits from the 40 percentage point Excise Tax rate cut to be felt by more dealers - some of whom had no inventory at or below the 1.5 litre benchmark when it was introduced in the last budget.

“Hopefully there will be some changes to the import rate on two litre engines and below,” Mr Lowe said, adding that the sector is also seeking changes to the business licence fee regime and the price controls imposed on it.

“We’re also hopeful about bonded facilities for parts,” he added. “When they reduce the import taxes on spare parts for WTO, for inventory we’ve already paid import taxes on we will have to mark the prices down, and there will be a loss of revenue based on what we’ve already paid. It could take a couple of years to cycle out.”

Turning to the Budget generally, Mr Lowe added: “I’m hoping there’s not going to be any new or increased taxes. I’m hoping what he [KP Turnquest] says is true and they go after the low hanging fruit, and I’m hoping they’ll change the business licence fee and get rid of price control.

“It’s just like the Post Office; they keep funding these losing ventures and keep taxing businesses into oblivion to pay for it. Seriously, they’ve got to deal with the Business Licence fee. The minister of finance keeps saying they need to replace revenue, but sometimes when the well runs dry and you’re taxing people out of existence like Taylor Industries, it’s difficult to lay down and say tax me some more, please.

“If they deal with that they may see gains in changing it. If businesses can see they’re keeping more of their profits, they may be willing to invest and do things they’re not prepared to do under present circumstances. The Government’s got to be prepared to take that gamble that less equals more.”

Mr Lowe added that increased government spending in today’s Budget was “the last thing we need at this point”, adding that the Minnis administration needed to keep its outlays “as tight as it can until the Budget deficits sort of bleed out and we start to run some surpluses”.

He said the Government may also have to examine trimming the tax breaks and investment incentives it grants to foreign direct investment (FDI) projects in a bid to boost revenues.