On Saturday, the government decided to impose 55 per cent as a special tax on hybrid cars cleared at the free zone. In another decision, the Cabinet allowed owners of conventional fuel-driven cars to replace their vehicles with hybrids and pay 40 per cent of their value as tax. Special tax on regular cars is 81 per cent of the value.

Ammar Shakaa, a car dealer, said the government did not study the decision properly, adding that demand will now increase on gasoline-run vehicles instead of environment-friendly cars because people will prefer to drive cars with affordable maintenance and spare parts, pointing out that hybrid prices have also gone up in the US market.

"Before the decision was taken, the government used to generate between JD2,000 and JD3,000 from fees on each hybrid car, but from now on the revenues from such cars will almost vanish," he noted.

According to Finance Minister Mohammad Abu Hammour, a total of 5,558 hybrid cars were imported to Jordan in 2009, depriving the treasury of JD76 million in exemptions, while in the first two months of this year, 2,600 hybrids entered the local market, with the value of exemptions amounting to JD40 million.

Nabil Rumman, president of the Jordan Free Zone Investors Association, said the decision "would annihilate the market for hybrid cars in the country", adding that the government should have studied how much money these vehicles used to provide to the treasury instead of focusing on the potential income the treasury lost from exemptions.

"The government should have kept the exemption on hybrids with small engines because people with limited income will not be able to afford the prices of green cars after the decision," he noted.

"Officials keep stressing the importance of consulting with the private sector before taking any decision, but they never coordinated with us in regards to this critical decision," he stated, indicating that the Cabinet could have taken a better decision if it had consulted all stakeholders.

Commenting on whether prices of hybrid vehicles will go up in the local market, Rumman said he expected prices to remain steady because traders will struggle to sell the available cars in the market, explaining that people will refrain from buying green vehicles as they will be costly in terms of maintenance and spare parts due to their limited presence in the market.

"If the number of hybrids is over 50,000 in the local market, maintenance and spare parts will be available. The government should have waited," the investor explained.

Nadim Haddad, marketing and sales manager at the Central Trade and Auto Company, Toyota's agent in Jordan, told The Jordan Times that the recent decision will severely affect sales of green cars in the Kingdom.

"There is not enough awareness on the advantages of hybrid cars on the environment and people do not pay attention to the environment," he said, predicting that demand will increase for the cheaper Korean cars.

In a statement sent to The Jordan Times, the Jordanian Geologists Association (JGA) said that imposing a 55 per cent tax on environment-friendly cars is against the government's plans to reduce Jordan's oil bill and protect the environment.

The JGA explained that the government should have exempted small-engine cars from the decision, saying the government should encourage people to replace their conventional cars with green cars without paying any taxes.

"If the government wants to generate more revenues it should not be through citizens' pockets," the statement said.

In remarks to The Jordan Times this week, Deputy Prime Minister and Minister of State Rajai Muasher said if the government exempted small-engine green cars alone, it would be discriminating between countries of origin, thus violating trade agreements signed with world partners.

By Omar Obeidat

© Jordan Times 2010

 

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