Car registration fee increased by 50%: Dream of owning a car is gone

In the near future, cars may have to pay a registration fee of up to 50%. If this happens, the cost of owning a car will not decrease, but even increase compared to now.

Risk of fee increase

The draft decree amending regulations on registration fees is being consulted by the Ministry of Finance with relevant agencies.

Accordingly, the first fee for passenger cars with less than 10 seats (including the driver) is 10%. However, the draft also allows localities to apply a fee of up to 50% based on actual conditions. When applying a fee higher than 10%, it must be decided by the People's Council of that province.

Currently, the first registration fee for cars with less than 10 seats nationwide has two levels: 10% and 12%, depending on the locality. However, with the large "openness" in the draft of the Ministry of Finance, if realized, it will allow localities to raise the registration fee for cars, anticipating the period when imported car prices from the ASEAN region decrease in 2018.

According to businesses, in early 2018, when the import tax rate for cars from the ASEAN region to Vietnam drops to 0%, car prices may drop by 20% compared to present. In 2018, many imported popular car models will appear on the market with prices of 500 - 600 million VND. There are only more than 200 days left until this time. Many Vietnamese consumers are looking forward to buying an imported car at a cheap price.

Calculations show that a car with a current selling price of 700 million VND will have to pay a registration fee of 70-84 million VND. Thus, the cost of this car will be up to 770-784 million VND. If in 2018, the car price decreases by 20% as predicted by businesses, down to 560 million VND, the registration fee paid at the current level will be only 56-67.2 million VND, the cost of owning a car will be from 616-627.2 million VND, a decrease of 154-158 million VND.

However, the plan to increase the registration fee will make it difficult to reduce the cost of owning a car. A financial expert said that it is unimaginable that the registration fee for a car is at 50%. A car with a selling price of 560 million VND must pay 280 million VND in registration fee, raising the cost to 840 million VND, which is too high.

According to this expert's calculation, in 2018, when the price of imported cars from ASEAN decreases by 20%, if we want to "keep" the cost of owning a car equivalent to the current time, we must adjust the registration fee to increase to 38%. For example, the same car with the current selling price of 700 million VND as above, by 2018 it will decrease by 20%, down to 560 million VND, the registration fee must be paid up to 212.8 million VND, adding up to equal the current level of 770 million VND.

The 38% rate calculated above is also quite high. If the Draft Decree amending the regulations on registration fees is passed, will any localities intend to apply this rate? This expert wondered.

Owning a car is too expensive

However, the registration fee is not only applied to imported cars from ASEAN but also to domestically assembled cars and cars imported from other markets.

For domestically assembled cars, in 2018, if the selling price can be brought to the same level as imported cars from ASEAN, the cost of owning the car will be the same. If the selling price is higher, the total cost will be higher than buying a car imported from ASEAN.

The high registration fee will make imported cars from other regions such as Europe, America, Japan, Korea, India... more stressful, especially expensive luxury cars. A car imported from Japan with a selling price of 2 billion VND, currently paying a registration fee of 200-240 million VND, if increased to 50%, will have to pay 1 billion VND, and at 38%, will also have to pay 760 million VND. The more expensive the car, the more money is spent on registration fees.

Increasing registration fees is inevitable. If the registration fee is raised by 20-30%, the cost of owning a car will always remain high. For a car purchased for 560 million VND, if the registration fee is at 20%, you will have to pay 112 million VND, increasing the cost to 670 million VND, and at 30%, the registration fee will be 168 million VND, increasing the cost to 728 million VND. That does not include other costs such as license plate fees, environmental fees, etc.

The scenario for cars is not much different from gasoline, when gasoline prices decrease, environmental taxes will increase. Selling at low prices will not help. Cheap cars still appear on the market, due to tax reduction; but after buying, if you want to circulate, you have to pay additional high fees. Calculating, the total amount spent to "upgrade your car" is still high in the end, expert Ngo Tri Long commented.

However, there are also opinions that, due to the large openness, localities still have to "look at each other" to increase. If a locality sets a low registration fee to compete to increase budget revenue, it is very likely that many car buyers from other places will flock there to register. Thus, other localities will not only have reduced revenue, but also have to bear the burden of infrastructure overload. If the issue of owner-owned vehicles cannot be tightened, localities will have to "look at each other" to be able to apply appropriate fee levels.

According to VNN