With a new special consumption tax about to go into effect, car owners in Vietnam will soon face a far bigger financial burden when purchasing large vehicles.
Beginning July 1, Vietnam's newest special consumption tax will cause the cost of bigger cars to skyrocket while rewarding those who purchase smaller vehicles, reports VnExpress. Once the new regulation becomes official, cars with a 1.5-liter engine capacity will see a tax decrease from 45% to 40%, however any vehicle whose capacity is above 1.5 liters will rise. According to the news outlet, cars with a capacity below three liters will see their taxes increase to 55%, while the tax on vehicles with a capacity under four liters will rise to 90%.
On the higher end, vehicles with a capacity below six liters will incur a 130% special consumption tax, while those which exceed six liters will incur a 150% tax, up from the current 60%.
But the taxation doesn't stop there. In addition to special consumption duties, car owners must tack on expenses for import tax, VAT, insurance, vehicle registration, road maintenance fees, license plate registration fees and liability insurance. While these have add-ons have always been part of car buying in Vietnam, the rising consumption tax is bound to have an effect, as some vehicle prices are set to jump by a considerable amount. Before July 1, for instance, you can purchase a Lexus LX570 with a 5.7-liter engine for VND5.6 billion (US$251,216); once the new taxes go into effect, that same vehicle will cost VND7.3 billion (US$327,478).
Those of you who are in the market for a Rolls-Royce should also hurry: according to Zing, the cost of the company's Ghost Series II EWB is set to rise from VND27.8 billion (US$1.25 million) to VND40.8 billion (US$1.83 million).
If this is a deterrent for car buyers, it's also not good news for car producers. At a recent seminar at the Central Research Institue for Economic Management, representatives from Ford and Mercedes also pointed out the inconvenience of Vietnam's ever-changing car taxes, as auto makers cannot create long-term plans with such constant change.
That said, registering fewer vehicles might mean we take sidewalk trimming off our list of traffic congestion solutions, so there's always that.
[Photo via Tuoi Tre]
