Herald: High taxes may prompt auto buyers to shop out of State
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High taxes may prompt auto buyers to shop out of State

30 Sep 2016 06:19am IST
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30 Sep 2016 06:19am IST

PANJIM: The shutdown of the mining industry in Goa has left an indelible impact on the auto industry. The result has been a 30-40 per cent drop in the sales of two wheelers and cars and about 80 per cent drop in commercial vehicles sales.

Team Herald

PANJIM: The shutdown of the mining industry in Goa has left an indelible impact on the auto industry. The result has been a 30-40 per cent drop in the sales of two wheelers and cars and about 80 per cent drop in commercial vehicles sales. It has been termed the worst recession in the auto sector that Goa has ever faced. 

The hike in VAT in March 2016, along with the hike in minimum wages in May 2016, also added to the woes of auto dealers in the State.

The recent hike in Road Tax has come as body blow to the already reeling auto sector in the State. 

“We in the automobile trade work on fixed margins and we cannot play with the price of the vehicle. After lifting of the mining ban last year the general sentiment of the public in Goa turned positive which actually changed the market dynamics for the better. This reflected in the sales too as in the month of August 2016 about 2500 cars and about 5500 two wheelers were sold as against the average of about 1500 and 3800 respectively,” said the President of the Goa Automobile Dealers’ Association (GADA), Prashant Joshi at a press conference.

However, the euphoria of good sales did not last long as a new notification from the Goa government on the hike of road tax left dealers high and dry. The rise of about 8 per cent in taxes has led customers to have a second thought about buying cars in Goa. 

“About 30 per cent of the people who had booked their vehicles are now waiting and contemplating buying vehicles from the states where taxes are lesser. After the Karnataka High Court decision, a person can buy and keep a car of any registration number in any state in India. We appeal to the Goa government to recall the new taxes and revert to old rates which was prevailing before September 21,” said the past president of the GADA, Manoj Caculo.

Off late it has been observed that a lot of high-end car customers from Goa are getting their new cars registered outside Goa to avail the benefits of lower taxes. 

During the press conference the Association members gave a clarion call to save the industry and the employment of at least 6500 people who are directly employed in this sector. 

“The irrational increase in road tax, infrastructure tax and imposition of facilitation fees in the month of September 2016 has led to de-growth in the industry by at least 25-30 per cent. Our recurring (establishment) cost remains the same while the sales are plummeting. It will surely have an impact on employment and we may have to shed at least 30 per cent of our employees by December, in case the government does not take any action and continues with this irrational taxation,” said Prashant Joshi. 

Presently the strength of employees across all dealers in Goa sums to approximately 6500. “If the present situation prevails, we foresee cut in manpower to the tune of 30 per cent, which could be in the range of 1950 by the end of this year,” added Mr Joshi. 

The automobile dealers in Goa contribute about Rs 800 to Rs 1000 crore per annum to the government treasury by way of VAT, road tax, infrastructure tax and other levies imposed by the Transport Department of Goa. 

“The move to impose this tax burden is almost like cutting the goose that lays the golden egg,” said Prashant Joshi.

The association has sensitised the Goa government after the budget presentation on the side effects of irrational increases in taxes.

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