Automotive Dealers Association head wants clarification on tax exemptions on hybrids

The content originally appeared on: Trinidad and Tobago Newsday

Automotive Dealers Association president Visham Babwah. –

President of the TT Automotive Dealers Association (TTADA) Visham Babwah has called for clarification on tax exemptions on electric vehicles with engine sizes 1599 cubic centimetres (cc) and under.

Babwah charged that several car dealers paid taxes throughout 2021 on these vehicles. He referred to a debate in the Senate on December 15 when Finance Minister Colm Imbert said people could import such vehicles tax free.

“From January 1, 2021, we (car dealers) paid all taxes, and he is claiming the exemption existed all during that period. He should make sure that he instructs the comptroller of Customs and Excise not to charge taxes on these hybrid vehicles,” Babwah said.

“If that is the case, the people who imported hybrid and had to pay taxes should be reimbursed. We also have to see the legal notice of this exemption.”

Babwah, the CEO of P&V Marketing Company Ltd in Chaguanas, said it appears taxes were only reinstated on electric vehicles with 1600 cc engines and above from January 2021.

“Imbert is now saying the exemption is there and has always been in effect for hybrids 1599cc and under.

“From 2016-2020, we had exemptions. In 2021, we had no exemptions. Exemption again is supposed to have started on electric cars January 1 as stated in the budget.”

In the 2021-2022 budget presentation on October 4, Imbert spoke about electric vehicles adding it was in keeping with the Government’s commitment to promote a green economy and reduce the country’s carbon footprint.

The minister said, “I propose to remove all custom duties, motor vehicle tax and value-added tax on the importation of battery-powered electric vehicles with an age limit on imported used battery-powered electric vehicles of two years.”

He said this measure would have been effective from January 1 and reviewed after two years.

On December 15, at the Finance (No.2 ) Bill in the Parliament, Imbert referred to comments made by opposition senator Wade Mark as misleading and inaccurate.

Mark had said used-car dealers are disadvantaged as the Finance Act of 2017, which saw tax exemptions on electric and hybrid vehicles, expired on December 31, 2020.

“Why remove the hybrid vehicles from this provision? Is this to punish the used-car industry and promote the interest only of the new-car industry?” Mark had asked.

In response, Imbert said the allegations that the Government had removed all tax incentives/ tax concessions for hybrid vehicles were “simply false.”

He clarified that in 2018, the Government looked very carefully at the loss of customs revenue from luxury hybrids that people were bringing in.

“When we (government) introduced the measure back in 2016/2017, we limited the importation of hybrid vehicles to vehicles with engine capacities of 2000 cc,” Imbert said.

“But car manufactures all over the world have now introduced a number of turbocharged engines with engine capacity 1.8 litres, two litres, etc.”

In the debate, he said, the Government saw that people at the lower income scales were not importing hybrids.

Instead, people were importing high-end hybrids like BMW and Mercedes Benz turbo-charged.

“In one year, the loss of customs revenue to the country was $350 million. What we did, because we still wanted to incentivise people to use these energy-efficient cars or environmentally-friendly vehicles, we recently limited the engine size to 1599 cc,” Imbert said.

“You (citizens) can still bring an electric or hybrid car, or CNG powered car, once it is below 1600 cc, free of duty and tax.”

He said there are endless hybrids in TT, including the Hyundai Ioniq.

“This is why I say they (opposition members) live in the twilight zone. They don’t live in the real world. It’s just luxury hybrids that became the problem,” Imbert said.

“So for the person at the lower end, they can buy a Hyundai Ioniq, or any other one of those small hybrid vehicles that people are making nowadays, and bring it in free of tax. That applies to used as well. It is both new and used.”