Laos drops import tariffs on cars to zero
Laos drops import tariffs on cars to zero
Laos has abolished import tariffs on vehicles as part of measures to end trade barriers ahead of the establishment of the Asean Economic Community (AEC) at the end of this year, according to a foreign trade policy maker.
Speaking in an exclusive interview with Vientiane Times earlier this week, Foreign Trade Policy Department Deputy Director General, Mr Saysana Sayakone said that Laos had begun to reduce import tariffs on goods since 2008 and now import tariffs on many goods have been reduced to zero.
“Import tariffs on a large number of goods have been reduced to zero including cars,” he said. “In the past, import tariffs on cars stood at 40 percent.”
Many countries regard import tariffs as a trade barrie r, which they have to impose as part of efforts to protect domestic products. Many countries find it impossible to export their goods to countries which impose high tariffs on imported goods.
In the case of Laos, this landlocked country considers tariffs as a major source of income. In the past, 11 percent of state income was sourced from import tariffs. Today, Laos imposes consumption taxes so that it can generate enough revenue to replace the lost income from the tariffs.
The abolishment of the import tariff on cars is meant to ensure that car makers in Asean nations can export their vehicles to Laos without any tariff charges.
Mr Saysana said that the price of cars in Laos was supposed to fall after the abolishment of the import tariff on vehicles as the car importers will find the cost of importing vehicles to be less.
However he believes that other conditions such as the high demand for cars and low business competition have caused the price of vehicles to be higher than in other countries.
Car sales businesses have welcomed the government's decision to end the import tariff on vehicles. They also agreed with the government policy to impose a consumption tax on vehicles so that it can retain the same amount of national income.
However they suggested that the government should collect the consumption tax after the sale of cars, a dding that the government still collects the consumption tax at the border checkpoints, which is considered as an additional cost of business operation. Car importers have to pay consumption taxes to the government despite the fact they have not sold any cars to customers.
They also said that the car importers sometimes had to borrow money from the banks to pay the taxes, which makes the price of the vehicles higher as the businesses have to pay the interest rates levied by the banks.
Trade policy makers suggested that one of resolutions which car importers should adopt is to set up a good business plan so that they will be able to sell all of the imported cars as fast as possible so that they are not burdened by interest rate rep ayments.
“If you i mport cars based on the orders of customers then you will not have to shoulder heavy responsibility to pay consumption taxes on cars,” said one of the trade policy makers.
