Automakers split on ministry's new excise plan for cars
The proposal is winding its way through the Finance Ministry, which said the new tax regime could take effect from Jan. 1, 1999 if it is approved. There is currently no timetable for when a decision on the tax regime must be made.
Whether the current proposal under discussion is put in place or not, the ministry expects that the excise tax regime will be different next year.
"There will be a change for sure," said Piotr Dubno, a Finance Ministry spokesman.
Currently, autos worth more than ECU 7,500 are assessed with a 10% excise tax for locally produced models and 15% for imports. Cars under this value limit are not hit with any excise tax.
Luxury car makers, especially those who import high-priced autos, are in favor of the change, which would lower the excise tax to 2% from 10-15%. "For sure it would improve the situation of companies who sell more expensive cars," said Wojciech Drzewiecki, managing director of automotive research firm Samar.
"This is a favorable solution," said Marcin Baszynski, head of marketing with PH Smorawinski i Spolka, which distributes BMW, Rover and Land Rover cars in Poland. All BMWs, for example, usually cost no less than zl. 100,000 and are charged with a 15% tax.
Auto sellers could not say exactly how the reduction in the luxury tax would affect pricing because the tax is applied to the wholesale value of the car. But customers would definitely see savings.
At Kulczyk Tradex in Warsaw a new Porsche 911 starts at DM 179,000. But if the excise tax regime is changed, the price could fall to between DM 150,000-DM 160,000, said Dariusz Krzosek, who manages Porsche sales at Kulczyk Tradex.
But producers of low-priced models, which sell the most units in Poland, said it is not fair for many consumers who can barely afford a car at present rates.
"Our opinion (of the proposal) is negative," said Krystyna Danilczyk, a spokeswoman for Daewoo-FSO. "The tax for luxury cars will be lowered and instead people who barely can afford a car will pay."
She added that Daewoo would have to automatically increase the price of its cars if the new 2% tax is applied to all cars. "I don't think it's socially appropriate," Danilczyk said.
But the proposal wasn't a clear cut issue for all auto makers. Although the bulk of Fiat's unit sales are in the lower-price category, it supports the proposed new excise tax, said Maciej Brzozowski, a spokesman for Fiat Polska. "Everyone will be equal, everyone will pay," he added.
And for Fiat a reduction in excise tax would be welcome because it is the largest payer of this tax in Poland, Samar's Drzewiecki said. In addition to small Fiats, the company also sells Alfa Romeos and Lancias. By the end of April, it had sold 1,200 Alfa Romeo's and 276 Lancias.
The Finance Ministry's Dubno said that a change in the tax regime is needed because the high excise rates caused companies to try and evade them by lowering the wholesale value of cars below ECU 7,500. "The main reason is to remove irregularities done by some importers," he added.
Dubno stressed, though, that the ministry has yet to reach a final decision on the tax regime and that there could be changes.
"The decree is not signed yet," Dubno said. "Until it is signed everything is possible."
He added that the change in its present form would not increase tax revenue for the government.
"It will be neutral to the budget," Dubno said, adding that in 1997 the excise taxes brought in about zl. 180 million ($52.2 million).
Whether the current proposal under discussion is put in place or not, the ministry expects that the excise tax regime will be different next year.
"There will be a change for sure," said Piotr Dubno, a Finance Ministry spokesman.
Currently, autos worth more than ECU 7,500 are assessed with a 10% excise tax for locally produced models and 15% for imports. Cars under this value limit are not hit with any excise tax.
Luxury car makers, especially those who import high-priced autos, are in favor of the change, which would lower the excise tax to 2% from 10-15%. "For sure it would improve the situation of companies who sell more expensive cars," said Wojciech Drzewiecki, managing director of automotive research firm Samar.
"This is a favorable solution," said Marcin Baszynski, head of marketing with PH Smorawinski i Spolka, which distributes BMW, Rover and Land Rover cars in Poland. All BMWs, for example, usually cost no less than zl. 100,000 and are charged with a 15% tax.
Auto sellers could not say exactly how the reduction in the luxury tax would affect pricing because the tax is applied to the wholesale value of the car. But customers would definitely see savings.
At Kulczyk Tradex in Warsaw a new Porsche 911 starts at DM 179,000. But if the excise tax regime is changed, the price could fall to between DM 150,000-DM 160,000, said Dariusz Krzosek, who manages Porsche sales at Kulczyk Tradex.
But producers of low-priced models, which sell the most units in Poland, said it is not fair for many consumers who can barely afford a car at present rates.
"Our opinion (of the proposal) is negative," said Krystyna Danilczyk, a spokeswoman for Daewoo-FSO. "The tax for luxury cars will be lowered and instead people who barely can afford a car will pay."
She added that Daewoo would have to automatically increase the price of its cars if the new 2% tax is applied to all cars. "I don't think it's socially appropriate," Danilczyk said.
But the proposal wasn't a clear cut issue for all auto makers. Although the bulk of Fiat's unit sales are in the lower-price category, it supports the proposed new excise tax, said Maciej Brzozowski, a spokesman for Fiat Polska. "Everyone will be equal, everyone will pay," he added.
And for Fiat a reduction in excise tax would be welcome because it is the largest payer of this tax in Poland, Samar's Drzewiecki said. In addition to small Fiats, the company also sells Alfa Romeos and Lancias. By the end of April, it had sold 1,200 Alfa Romeo's and 276 Lancias.
The Finance Ministry's Dubno said that a change in the tax regime is needed because the high excise rates caused companies to try and evade them by lowering the wholesale value of cars below ECU 7,500. "The main reason is to remove irregularities done by some importers," he added.
Dubno stressed, though, that the ministry has yet to reach a final decision on the tax regime and that there could be changes.
"The decree is not signed yet," Dubno said. "Until it is signed everything is possible."
He added that the change in its present form would not increase tax revenue for the government.
"It will be neutral to the budget," Dubno said, adding that in 1997 the excise taxes brought in about zl. 180 million ($52.2 million).
