Marcella Scarlett, Business Reporter

Come April 1, with the new customs administration fee (CAF) and the broadening of the GCT base, car dealers say their cost of business will be higher but that they plan to pass on the cost to their customers.

The CAF will replace the customs user fee (CUF) administered by the Customs Department, the latter having been found to be in breach of free-trade rules.

The CAF is said to be a more accurate reflection of the services being offered at the ports and would be in keeping with World Trade Organization guidelines.

The Government hopes to raise J$1.5 billion by including all fees and taxes paid at the port as part of the GCT base. Previously, processing fees, environmental fees and the CUF were not included in the GCT base.

An additional J$1.2 billion is to be earned from the CAF on all imports, except imports by charitable organisations and the bauxite sector. It will be administered as a flat fee of J$55,000, which will attract GCT. It will be applied at the point where vehicles are cleared from the port and are being transferred to a bonded warehouse.

The CUF was a flat two per cent of the cost, insurance and freight (CIF) value of each car.

Additionally, the chairman of the Automobile Dealers' Association, Ken LaCriox, said the dealers will also be required to pay J$5,000 plus GCT for each vehicle when it is coming out of the warehouse.

President of the Jamaica Used Car Dealers' Association (JUCDA), Lynvalle Hamilton, said used-car dealers used to pay, on average, J$20,000 to J$30,000 per car under CUF because his membership imported vehicles of "low" CIF.

"Say we brought in a car for US$8,900, we would pay about J$17,000. Now with the flat fee, we will have to pay $55,000 instead," said Hamilton.

Dealers' favour

Still, Hamilton said the fee could work in the dealers' favour.

"Since the fee is now charged per entry rather than per car, there might be some degree of flexibility to spread the cost across several vehicles, but this will be dependent on the dealer's ability to clear all of the cars on the entry form at the same time," he said.

"If you have a bill with three cars on the one entry, then the $55,000 would be split among all of the cars. At that time, it is cheaper per car, yes, but there are times when the dealers may not have the funds to clear all the vehicles at the same time and you can't clear one vehicle on an entry and leave one - you have to clear all of them," Hamilton said.

Both the ADA chairman and JUDCA president said the increase in cost will be passed through to customers.

"Prices are going to go up. It is just another administrative fee and it boils down from the Government trying to collect revenues. They are trying to collect revenue but at some point in time they will have to realise that they can't keep going back to the same people to collect all the time," said LaCroix.

Hamilton said while he would encourage his membership to absorb the increase in fees, but said the JUCDA does not plan to interfere in the business of its members were they to do otherwise.

"I don't think it is wise to let customers bear the increase, so it is advised that the dealers absorb these costs," Hamilton said. But: "At the end of the day, each dealer will have to decide what is best for their businesses ... . You will have dealers who will have to push up their prices."

Hamilton said used-car prices could climb by J$50,000 to J$150,000, depending on the type of overheads faced by individual dealers.

ADA Chairman LaCroix said most of the new vehicles imported usually have CIF value of less than US$25,000.

"To say that you are going to benefit is not true because we all will be losing on this one. The majority of the vehicles we bring in are of low CIF too and the CUF was usually lower than J$55,000," said LaCroix.

"Yes, the CIF of most of our vehicles is higher than used-car dealers, but it is still not high enough to be paying J$55,000," he said.

marcella.scarlett@gleanerjm.com