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Algeria's tax on new cars sends prices high
ALGERIA. Sept. 7, 2008. New
taxes on personal vehicles mean Algerians are paying more for new, as well
as used, cars.
The Algerian government says it created a new tax on personal vehicles to
encourage and subsidise public transport. Algerians, however, complain
about the burden of having to pay more for new cars.
Since 28 July, dealers have been
required by law to pay a new tax, ranging between DZD 50,000 and DZD
150,000 per new vehicle. Dealers are also required to pay a 1% duty on
their total annual turnover. Ultimately, the dealers pass on the
additional cost to the consumer, raising the price of vehicles.
Algerian Minister of Finance
Karim Djoudi said the new financial measures are needed to subsidise
consumer costs for major public transport developments such as trams and
the metro.
For his part, Algeria's General
Director of Taxes (DGI), Abderrahmane Raouia, told the press that the new
taxes are expected to bring in between DZD 6 billion and DZD 7
billion (US$97 million to US$113 million) to the treasury every year.
Auto dealers and the public are
unconvinced.
The Algerian Car Dealers’
Association issued a public statement noting its dissatisfaction with the
decision, and criticising the unilateral nature of the government's
decision.
"Members of the association’s
policy bureau have looked at the repercussions of the steps taken by the
authorities without involving those working in the car sector, one of the
most important sectors of the national economy," the statement said.
The association asked the
government to delay the introduction of the new taxes in order to complete
reviews, but the request was unsuccessful.
An account manager for a French
auto dealer in Algiers told Magharebia that the new taxes came as a
surprise.
"We are caught between a rock and
a hard place. On the one hand, there is pressure being brought to bear on
us by the government, which is imposing new taxes without warning. On the
other hand, there are customers who placed orders weeks ago, not knowing
that the starting price would have to increase," said the account manager.
"We are facing a real dilemma."
Many customers say they cannot
afford the new taxes.
"I’m sorry I sold my car," said
Mohamed, who sold his old car and had planned to buy a newer model. "The
prices of new vehicles have gone through the roof."
The middle class, which often
resorts to loans in order to purchase vehicles, has been particularly
hard-hit by the new taxes.
"It’s as if they want to prevent
the middle classes from owning cars," said Hakim, who works in public
administration. "This is an underhanded sanction. The country is rich and
does not need to go picking the people’s pockets to finance public
transport."
According to Mohamed Bairi,
President of the Algerian Car Dealers’ Association, new cars make up 80%
of the Algerian vehicle market.
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