The rumor about government plans to eradicate surtaxes and excise taxes on new vehicle imports has dramatically deflated the city's used-vehicle market over the last two weeks. Traders believe discouraging used vehicles has been the government's plan for many years and now they have decided to scrap the two taxes on new imports. The decision has already been made, but it has not been implemented yet, an individual in the industry told Capital.
The rumor has prompted traders to reduce prices by an average of 30,000 birr on used vehicle within the last fortnight. Secondhand Atoz cars, which are known for their fuel efficiency, cost 60,000 birr some five years ago, however, inflation, foreign currency shortages and others factors hiked their price to 120,000 birr until one month ago. But now the rumor has sent the price back down to 85,000 birr.
"If we maintain the current price it mess up our business because elimination of the two tax types means a lot to new vehicle importers," the businessman told Capital. However, statements coming from the government do not corroborate the rumor.
"I am surprised with the rumors and the market, because I am the one to be aware about such plans of the government," Yared Tewolde, who is in charge of the ministry's tariff and price director of the Revenue and Customs Authority, confirmed to Capital. Yared said the situation forced him to call Ministry of Finance and Economic Development (MoFED), the responsible body for imposing and reducing taxes, but the responsible department was also in the dark about the rumors.
"I have been not told to execute any plan and there is no such plan with the ministry" Yared confirmed. But importers of new vehicles were called by MoFED a few weeks ago to discuss import tax issues, a businessman who attended the meeting told Capital. Capital's attempts to speak to the legal department of MoFED failed.
[Capital]