Residential buildings on the island of Taipa are seen from a vehicle crossing the Sai Van Bridge
The Legislative Assembly (AL) unanimously passed a bill yesterday afternoon proposing an increase in taxation for vehicle purchases. The act also ends the tax exemption for automobiles purchased for tourism-related purposes.
As part of the authorities’ commitment to curb the soaring number of vehicles in the territory, the bill, which was passed through a special procedure that combines the final and first readings, was expected to slow the average annual increase in car numbers from 5.54 percent to 4 percent.
Motorcycle buyers will be levied a tax ranging from 24 percent to 50 percent, up from the current range of 10 percent to 30 percent. Meanwhile, private car purchases will be subject to a tax ranging from 40 to 90 percent, up from the current range of 30 to 55 percent.
Furthermore, under the amendment the tourism sector will liable for tax upon the purchase of tourist coaches. The Secretary for Economy and Finance, Lionel Leong, said that the tax exemption that has now been revoked “was originally introduced to foster the initial phase of Macau’s budding tourism industry.”
The authorities’ move has been drawing concerns and opposition from the industry since their intentions surfaced earlier this year. Lawmakers again indicated that the policy would just leave small and medium-sized operators with bigger challenges to their business, while causing no intimidation to their bigger counterparts.
“The large companies would still continue to buy buses to support their business; the number of cars on the roads will probably not go down,” said lawmaker Zheng Anting, while highlighting that casinos’ shuttle buses carry a daily passenger volume one fifth of that carried by public transport.
Another contentious part of the proposed revision to the tax law is a 15-day period before the law comes into effect during which requests for tax exemption are still allowed.
Currently, casinos and travel agencies have to file a request to the financial authorities if they wish their vehicles to be exempt from taxation, while also requiring a green light from the Macau Government Tourist Office (MGTO).
The office’s head, Maria de Senna Fernandes, who was also in attendance yesterday, said that generally only half of the received requests would obtain her approval. Around 40 applications are being processed at the moment. She also claimed that the new policy would not cause long-term financial harm to those small business owners.
During the three-hour discussion another lawmaker, Lei Cheng I, voiced his doubts that the authorities’ low-tax policy for green automobiles would offset the new tax adjustment.
“Such a tax-discount policy for environmentally friendly cars, especially using a benchmark that defines the type of those vehicles at a much lower standard than the neighboring regions, seems like you want to increase the tax on one hand and yet let people import cars under such a low standard,” she criticized.
Lei’s benchmark refers to the European emission standards. Vehicles with emissions up to Euro 4 level are viewed as green cars in the region.
The authorities said that the studies and discussion about raising the threshold were still ongoing and that they will announce the relevant policies early next year.
huge drop in car sales expected
The sales of new vehicles may slump by 30 percent year-on-year, according to the president of the Macau Motor Traders Association. Patrick Tse told Business Daily that some small companies that trade vehicles in Macau are expected to close.
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