Gov't gives tax break on second-sale motor vehicles

5:04 pm, Thu March 9, 2023

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Finance Minister Dr. Nigel Clarke and Lynvale Hamilton, President of the Used Car Dealers Association

By Halshane Burke

The government is moving to reduce the amount of general consumption tax (GCT) paid on second-sale motor vehicles.

Currently general consumption tax of 15 per cent is paid on the full sale price on such sales by registered dealers.

But Finance Minister Dr. Nigel Clarke says upcoming legislation will see GCT being paid only on the mark up.

"We will allow for registered motor vehicle dealers selling second-sale motor vehicles to pay a rate of 15 per cent on the dealer dollar margin rather than the full cost price. So you're buying the vehicle from somebody for $100 and you sell it for $120, you're paying GCT on the $20," Dr. Clarke explained as he opened the Budget Debate in the House of Representatives on Tuesday.

The minister said individuals will continue to pay a flat fee of $12,000 or $18,000 on the sale of their vehicles.

The Jamaica Used Car Dealers Association has welcomed the move by the government to lower the tax liability on second-sale vehicles.

Linvale Hamilton, president of the association, noted that under the previous arrangement, people were forced into private deals to avoid the "enormous and unreasonable" tax on the full cost of the motor vehicle.

He said the government's move should now encourage more people to sell their vehicles to registered dealers rather than entering into these private arrangements.

However, he expressed concerned that no mention was made of the investment made by the dealers to ensure a car is sale ready.

"What would happen [is the dealers] would refurbish the car, so to speak. They would recondition them and there's a cost associated with that. But what we notice the government says is that it's just the difference between what you bought the car for, and what you sold it for. I think the repair cost should be taken into consideration and the tax, the GCT is on that portion," he suggested.

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