Vinh City's tax revenue drops due to sharp decline in car transactions

(Baonghean) - If in 2016, Vinh city had a large number of cars traded with 7,055 cars, including hundreds of supercars, then in the first 4 months of this year, only 2,096 cars were traded and registered, a decrease of more than 500 cars compared to the same period in 2016.

Revenue shortfall due to reduced purchasing power

Registration fee is a fee that the owner of fixed assets such as cars, motorbikes, houses, etc. must declare and pay to the tax authority before putting the fixed assets into use. In principle, the buyer must pay the registration fee. In 2017, the number of car and motorbike transactions decreased sharply compared to 2016, which is the reason for the sharp decrease in registration fees in recent times.

Officers of Vinh Tax Department check online tax payment. Photo: Nguyen Son

According to Ms. Phan Thi Ly - Deputy Head of the Other Registration and Personal Income Tax Team of Vinh Tax Department, in the first 4 months of the year, there were very few customers coming to pay registration fees, the collection counters were deserted, especially for car registration fees, only 2,096 cars were registered and paid tax (in the same period in 2016, there were 2,518 cars registered).

The amount of registration fees collected in the first 4 months of 2017 (including cars and motorbikes) reached 92.026 billion VND, of which the registration fees for cars reached 87.8 billion VND; while in the same 4 months of 2016, the amount of registration fees collected by the Department was 119 billion VND. With this decline, the Department's plan to collect 380 billion VND in registration fees will not be achieved, while this is a major source of revenue for the Vinh Tax Department and the entire industry.

Registration fees have been an important source of revenue in recent years, especially when the real estate and automobile markets have become highly attractive, with increased transactions in the market in Vinh City. Registration fees play an important role in budget revenue, but they are a passive source of revenue that cannot be predicted in advance.

The purchasing power of Vinh city residents is very large. Statistics from Vinh Tax Department show that in 2016, the number of cars worth 2 billion VND or more was nearly 300, of which 70 were luxury cars (cars from 3 billion VND to 10 billion VND, over 10 billion VND), this is a large source of tax revenue for the Department, because each car pays hundreds of millions of VND in taxes, some pay billions).

People wait for car price reduction in 2018

Mr. Phan Van Viet - Head of Vinh Tax Department said: In 2016, it can be said that the number of cars traded was large, especially luxury cars. Besides, many transport companies such as Mai Linh, Thach Thanh, Van Xuan taxi, Song Lam. Vinh taxi... also invested in many new cars.

This year, the number of cars traded is low, according to us, because businesses and people think that in early 2018, when the import tax rate for cars from the ASEAN region to Vietnam drops to 0%, car prices may drop 20% compared to now, so they wait until next year to buy cars.

Many Vietnamese consumers are looking forward to buying imported cars at cheap prices. Besides, the demand for cars is also gradually becoming saturated.

Luxury cars appear a lot in Vinh city. Photo: Tran Chau

According to calculations, 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. In 2018, if the car price decreases by 20% as predicted, a car worth 700 million VND will be 560 million VND, the registration fee will be paid at the current level, only from 56 - 67.2 million VND, the cost to own a car will be from 616 - 627.2 million VND, a decrease of 154 - 158 million VND/car, which is a good reason for people to wait for the past few years.

However, according to unofficial sources, the Government is planning to increase registration fees, so cars imported into Vietnam will still be expensive due to registration fees. The more expensive the car, the more money will be spent on registration fees.

Chau Lan