Plan to cut taxes on new cars will increase sales by 28,000 vehicles, manufacturers argue

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• The National Association of Automobile Manufacturers of South Africa has submitted a proposal to the government, arguing for a reduction of taxes on new vehicles.
• He wants the carbon tax to be suspended and the ad valorem tax reduced.
• Lowering the tax rate to 35% on new cars should boost sales by 28,000 vehicles a year, Naamsa believes.
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Reuters reports that automakers are asking the government to lower the tax rate on new vehicles from 42% of the purchase price to between 35% and 38%.

The National Association of Automobile Manufacturers of South Africa (NAAMSA) has submitted a document to the government proposing that the carbon tax on new cars be stopped and the ad valorem tax reduced.

Naamsa estimates that this could boost new vehicle sales by more than 28,000 units and therefore boost tax revenue and create jobs, Reuters reports.

The carbon tax rate on new cars was recently increased and is calculated in the gram of carbon dioxide delivered per kilometer. According to a recent Car Magazine calculation, the emissions tax for a new Polo Vivo 1.6 model would be nearly R7,200.

Automakers have been hit hard by a drop in local sales during the shutdown, while vehicle exports so far in 2020 are 40% lower than last year.

Naamsa CEO Mike Mabasa warned that without government intervention to boost local sales, automakers that rely heavily on export sales could find their South African operations unviable and leave the country. .

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