Government wants taxes on pick-up trucks hiked to match cars

Hanoi (VNA) - The Government has instructed the Ministry of Finance to consider changes to special consumption taxes on imported pick-up trucks to level the field for cars.

Since July 2016 the tax has been just 15 percent, much lower than the rate on passenger cars.

There is also a big difference in another tax between the two vehicles - import tariff. It is a mere 5 percent on pick-ups imported from ASEAN member countries, while it is 30 percent on cars.

As for another major expense in buying a vehicle, registration fee, it is only 2 percent of their cost on pick-ups whereas it is 10-15 percent on cars.

Pick-ups now come with lots of convenient features just like passenger cars, and can be used for travelling in addition to carrying goods and are capable of operating in various terrains, including rural and mountainous areas.

While sport utility vehicles (SUVs) with similar engine displacement cost in the billions, a pick-up can be bought for just 600-700 million VND (26,595-31,028 USD).

To no one’s surprise, pick-ups have become favoured vehicles in Vietnam, resulting in a sharp increase in demand for them in recent years.

Most famous brand names from Japan and the US, like the Mazda BT50, Mitsubishi Triton, Toyota Hilux, Nissan Navara, Isuzi D-max, Ford Ranger, and Chevrolet Colorado, are in the market besides some lesser known names like the UAZ Patriot from Russia.

Most are imported from Thailand, which is among the world’s largest pick-up manufacturing hubs.

According to the Vietnam Automobile Manufacturers Association, last year automobile sales reached 304,427 units following a year-on-year increase of 24 percent, of which pick-ups accounted for 23,099.

It put them in third position behind only small sedans and SUVs.

The low taxes and fees they enjoy have helped create “unfair competition” in the market, according to analysts.

They said pick-ups are now being used like small sedans and so it is only fair that they are taxed at the same rates as other cars.

The Government also thinks it is necessary to amend the taxes and fees to ensure fair play in the market.

The finance ministry has proposed hiking the special consumption tax on pick-ups to a level equivalent to 60 percent of the rate on sedans with the same engine capacity.

At this rate, most pick –up trucks, which have engines of 2,000-3,000 cc, will attract a tax of 36 percent, more than double the current rate of 15 percent.

But there is opposition to this, with some analysts warning it would affect the transport costs of many goods and services since 70 percent of pick-up trucks are used for this purpose.

Many enterprises’ costs would increase at a time when they are on the path to integrating with the regional and international economies, they pointed out. But it might be too late because though the plan to hike the special consumption tax is still under consideration, dealers have already increased prices by hundreds of millions.

The cost of a Ford Ranger pick-up has gone up from 619 million VND to 859 million VND, and that of a Toyota Hilux from 650 million VND to 750 million VND.

Market observers expect a dramatic drop in demand now since prospective buyers are likely to reconsider their plans.

In 2009, when the special consumption tax on the Toyota Innova increased from 30 percent to 45 percent, sales fell from 14,000 units the previous year to 7,500.-VNA