Vehicles dealers in Dar city records lower purchases

DEALERS of used vehicles are bearing the brunt of Tanzania's depressed economy with statistics showing that sales for 2012/2013 trading period have dropped by half compared to the previous period of the year. Report on sales records shows an alarming rate on sales decrease for the last 12 months with most dealers blaming the government as the main cause for having imposed high tax rates and other duties charged for the imported vehicles during 2012/13 national budget sessions. Following the imposition of high tax rates and other duties on the imported used vehicles, dealers opted to increase the prices of their vehicles significantly an aspect which has become unaffordable even to some middle class people in the country. Interviewed dealers have thrown blame to the deteriorating market conditions, which they say have forced some of them to revise profits targets--meaning that shareholders in the firms should brace themselves for lower dividends. The survey shows that, despite of increase in tax rates on vehicles sold in the country during the previous budget session of 2012/13, vehicles dealers have been collecting as much as little money from their stocks in their showrooms resulting to a relatively low purchases done. The previous budget had granted motor vehicles exemptions to various beneficiaries through Government Notices so that importation of the motor vehicles aged more than 8  years from the year of manufacture are subjected to the excise duty of 20 percent. Winding up a national budget session, the Finance Minister Dr. William Mgimwa said that the measure was intended to discourage importation of obsolete vehicles so as to preserve and protect environment in the country. A week long survey carried out in some showrooms selling used vehicles in the city of Dar es Salaam witnessed an extensive display of vehicles in showrooms with the small number of vehicles being registered per week, thus indicating the continued low purchases done. Shaikh Jawaid Latif, the Managing Director of the Arisha Traders Ltd, dealers in Japanese cars in the country lamented over his weekly sales which he said that in a week, he sells four cars from his yard. According to him, he has even threatened to close up the business as he is earning the money which cannot even make him cater for other necessities such as paying government tax and other overhead expenditures. He attributes the low purchases as is due to high tax rates and other duties imposed by the government on imported vehicles in the country. “The low sales cannot make us survive” he said. He expected the government would reduce the rates and make it fairly affordable in this year’s budget of 2013/14 whose session ended in Parliament last month as per their requests which they had sent for considerations to the government before the budget session started. Cornered by this writer is another vehicle dealer Zulfiqar Ahamad, a Pakistan national who works with Car Club Ltd a commission agent and dealers of the Japanese used cars in the country who complains of the attitudes shown by TRA officials in the country. He says that, the officials from the authority keeps on harassing him now and then and sometimes are threatening to revoke his work permit if he tends to go against their wishes. However, he noted that, the business of car selling has gone far with profits. Despite lower purchases recorded by vehicle dealers in Dar es Salaam, statistics by the Tanzania Revenue Authority (TRA) made available to The Guardian early this week through its public relations office shoes that, taxes charged on the importation of vehicles has increased from sh. 398.2 bn/- in 2011 to 458bn/- in 2012. Statistics further shows that the total number of motor vehicles registered between Jan-Dec 2011 has increased by 3 percent from 173,700 to 176,296 vehicles registered between Jan-Dec 2012.  Statistics indicates that, out of the vehicles registered in the country motorcycles alone account for 76 percent from 108,725 vehicles in 2011 to 114,743 vehicles in 2012 respectively. The least registered vehicles were the agricultural tractors and their trailers whose numbers increased from 36 for trailers and 1,218 for tractors in 2011 to 145 trailers and 1,885 tractors in 2012 respectively. Commenting on the business trend from the statistics given, an official from the Tax payers’ education department at TRA who preferred anonymity said that, the rate of importing vehicles in the country has come down due to the increased high tax on importation as imposed during the 2012/13 national budget. However, according to the source, quoting from the statistics given there is little change of increase on import and excise duties charged on vehicles for the two year trading period from January 2011 to December 2012 which is approximately Sh 20 bn/- alone.