Compendium of Auto Taxes in APEC Region

Transcription

1 2018/AD2/016 Agenda Item: 6.1 Compendium of Auto Taxes in APEC Region Purpose: Consideration Submitted by: United States 29th Automotive Dialogue Chiang Rai, Thailand October 2018

2 APEC Motor Vehicle Related Taxation UPDATED Comparative Analysis and Findings October 2018

3 Categories of Auto Taxes Four basic auto tax categories were identified: 1. Border (Paid upon the import of the vehicle) Most commonly the import tariff. 2. Purchase (Paid at the point of purchase) Most commonly, Value Added Tax (VAT) and General Sales Tax (GST), but also indirect Excise Taxes. 3. Possession (Paid over the life of the motor vehicle) Most commonly an annual registration tax. 4. Use (Paid during the use of the vehicle) Most commonly a fuel tax per liter of gasoline or diesel. And there are also important tax incentives used in the automotive sector- primarily to promote energy efficiency (not thoroughly covered in the following analysis). Analysis 2

4 Tax Comparison Variables Analysis 4 New Car/Sedan <10 seats and 1 New Pickup Truck (5 generic examples) WHOLESALE/IMPORT (Customs Value) RETAIL (Consumer/Purchase Price) ENGINE SIZE/TYPE (Displacement/ Gas or Diesel) NUMBER OF PISTONS (cylinders) FUEL TYPE (Gasoline/Diesel) ENGINE POWER: (Horse Power) TRANSMISSION: (Automatic/2x4) VEHICLE WEIGHT (kg) FUEL EFFICIENCY (per 100km) FUEL EFFICIENCY (per km) NON-TAX PRICE (Gasoline/liter) FUEL TYPE/MEASURMENT: (Gasoline Unleaded/Liter) DISTANCE TRAVELED ANNUALLY (15,000km) LITERS CONSUMED (per 15,000 km) ANNUAL NON TAX (Cost of Gasoline) AIR CONDITIONING (Yes/No) 3

5 Tax Analysis: Assumptions This analysis shows generic examples of vehicle configurations with several omissions and assumptions to make equal comparisons possible: It omits: Preferential tariff arrangements (Free Trade Agreements); Special treatment of CKDs; Special domestic tax treatment afforded domestic over imported vehicles; Off the book special arrangements; and Tax incentives for green technologies. It assumes: For a retail price, a 10% markup from the import or wholesale price; Vehicles with automatic transmissions, 2x4 drive; The use of regular unleaded gasoline; The cost of driving the vehicle 1-year (15k per year); That the price of pre-tax gasoline is the international spot market over the last year April 2018 October 2018; The exchange to the US dollar is the average between Nov October Analysis 4

6 $29,000 $25,772 Total Auto & Tax Components (Car 1) $24,000 $19,000 China moved from 7th highest to 10th lowest, due in large part to the reduction in auto tariffs (border taxes) $14,000 $9,000 $4,000 $1,503 $(1,000) Auto Purchase Taxes (Car 1) Auto Possession Taxes (Car 1) Auto Use Taxes Car 1) Auto Border Taxes (Car 1) * Singapore Does not include COE

7 $59,000 $54,000 1st $56,400 Total Auto & Tax Components (Car 1) 10 YEAR ANALYSIS $49,000 $44,000 $39,000 $34,000 When comparing 10 years vs. 1 year tax burden, some economies shift dramatically up the list of the heaviest tax burden- for example for this car Japan moves from the 19 th heaviest in the 1 st year to the 9 th heaviest tax burden after 10 years $29,000 $24,000 $19,000 5th JAPAN $14,000 $9,000 $4,000 10th 15th $(1,000) Analysis Auto Purchase Taxes (Car 1) Auto Possession Taxes (Car 1) Auto Use Taxes Car 1) Auto Border Taxes (Car 1)

8 $34,000 $30,798 Total Auto & Tax Components (Car 2) $29,000 $24,000 $19,000 China moved from 7th highest to 10th lowest, due in large part to the reduction in auto tariffs (border taxes) $14,000 $9,000 $4,000 $1,784 $(1,000) Auto Purchase Taxes (Car 2) Auto Possession Taxes (Car 2) Auto Use Taxes (Car2) Auto Border Taxes (Car 2) * Singapore Does not include COE

9 $69,000 1st $69,368 Total Auto & Tax Components (Car 2) 10 YEAR ANALYSIS $64,000 $59,000 $54,000 $49,000 $44,000 $39,000 $34,000 China VAT and MFN tariff reductions dropped it 4 slots from 8th highest overall to 12th. $29,000 $24,000 5th $19,000 $14,000 10th 15th $9,000 $4,000 21st $(1,000) Auto Purchase Taxes (Car 2) Auto Possession Taxes (Car 2) Auto Use Taxes (Car2) Auto Border Taxes (Car 2) * Singapore Does not include COE

10 Total Auto & Tax Components (Car 3) $49,000 $48,137 $44,000 $39,000 $34,000 $29,000 $24,000 $19,000 $14,000 $9,000 $2,349 $4,000 $(1,000) Auto Purchase Taxes (Car 3) Auto Possession Taxes (Car 3) Auto Use Taxes (Car 3) Auto Border Taxes (Car 3) * Singapore Does not include COE

11 $94,000 $89,000 $84,000 1st $92,463 Total Auto & Tax Components (Car 3) 10 YEAR ANALYSIS $79,000 $74,000 $69,000 $64,000 $59,000 $54,000 $49,000 $44,000 $39,000 $34,000 5th $29,000 $24,000 $19,000 $14,000 $9,000 10th 15th 21st $4,000 $(1,000) Auto Purchase Taxes (Car 3) Auto Possession Taxes (Car 3) Auto Use Taxes (Car 3) Auto Border Taxes (Car 3) * Singapore Does not include COE

12 Total Auto & Tax Components (Car 4) $139,000 $136,858 $119,000 $99,000 $79,000 $59,000 $39,000 $19,000 $4,229 $(1,000) Auto Purchase Taxes (car 4) Auto Possession Taxes (car4) Auto Use Taxes (car4) Auto Border Taxes (car 4) * Singapore Does not include COE

13 $239,000 $229,000 $219,000 $209,000 $199,000 $189,000 $179,000 $169,000 $159,000 $149,000 $139,000 $129,000 $119,000 $109,000 $99,000 $89,000 $79,000 $69,000 $59,000 $49,000 $39,000 $29,000 $19,000 $9,000 $(1,000) 1st $223,058 5th Total Auto & Tax Components (Car 4) 10 YEAR ANALYSIS 10th 15th $6,496 21st Auto Purchase Taxes (car 4) Auto Possession Taxes (car4) Auto Use Taxes (car4) Auto Border Taxes (car 4) * Singapore Does not include COE

14 Total Auto & Tax Components (Truck 1) $44,000 $39,973 $39,000 $34,000 $29,000 $24,000 $19,000 $14,000 $9,000 $3,446 $4,000 $(1,000) Auto Purchase Taxes (trk 1) Auto Possession Taxes (trk 1) Auto Use Taxes (trk 1) Auto Border Taxes (trk 1)

15 $64,000 $63,442 $59,000 $54,000 $49,000 Total Auto & Tax Components (Truck 1) 10 YEAR ANALYSIS $44,000 $39,000 $34,000 $29,000 5th $24,000 $19,000 10th $14,000 15th $9,000 21st $4,000 $(1,000) Auto Purchase Taxes (trk 1) Auto Possession Taxes (trk 1) Auto Use Taxes (trk 1) Auto Border Taxes (trk 1)

16 APEC Auto Tax Findings Biggest Contributors Auto taxes are as diverse as the economies involved, but there are some obvious similarities and patterns that emerge. Regardless of the vehicle characteristics the two biggest contributors to the differences in total taxes for the FIRST YEAR are Purchase and Border taxes. Possession taxes for the first year are minimal in comparison, but much more significant after 10 years, especially in some economies. Taxes (or subsidies) on Use (fuel cost for 1 year) also has little impact on the overall tax burden. 15

17 APEC Auto Tax Findings Auto Tax Groups The economies tend to breakdown into three categories- High, medium and lower auto tax burdens: Top third tax group includes (Singapore, Vietnam, Malaysia, Indonesia, and Thailand and India). Middle third tax group includes (China, Hong Kong, Chinese Taipei, Korea, Philippines, Russia, Mexico) Lower third tax group includes (Peru, Chile, Canada, New Zealand, Australia, Japan, Brunei and the USA) 16

18 APEC Auto Tax Findings Tax Groups (Top) What are commonalities in the top third? The economies with the higher auto taxes (Hong Kong and Singapore aside) have relatively higher import duties and excise taxes on cars with larger engines. Vietnam has a 70% import duty, and a consumption/excise tax ranging from %. Indonesia has a 40% import duty, with a large luxury sales tax topping out at 75% and also applies a high excise tax ranging from % based on engine size. India has a 60% import duty, and an excise tax ranging from %. Thailand has a 80% import duty, and an excise tax, ranging from 3-50%, that significantly favors pickup trucks and cars with smaller engines over cars with larger engines, and favors low Co2 emissions. Malaysia has a 30% import duty, coupled with an excise tax that ranges at 60%. 17

19 APEC Auto Tax Findings Tax Groups (Low) What are commonalities in the lower third? The lower third tax group includes (Peru, Chile, Canada, New Zealand, Australia, Japan, Brunei and the USA) for the first year. Total taxes are US$9,000 or less on car examples (excluding the luxury car) Import duties are at 6.1% or less on passenger cars, with three economies with zero tariffs (Brunei, Japan and New Zealand). Purchase taxes are not based on engine displacement (except for Brunei). Comprised mostly of developed economies 18

20 APEC Auto Tax Findings Domestic vs. Import Border taxes, which vary widely- from 0% to 80% within the APEC region, represent the difference between import and domestic price differences. Of the 20 economies analyzed: 5 have 0% import duties on Passenger Cars (Brunei, Hong Kong, NZ, Japan and Singapore). 9 have import duties ranging from % (Australia, Canada, Chile, China, Korea, Mexico, Chinese Taipei, Peru, and the USA). 7 (6 APEC) have import duties between 25%-80% on passenger cars (Indonesia, Malaysia, Philippines, Thailand, Russia, Vietnam and India). 19

21 Excise Tax- Definition & WTO Large Impact An excise tax (sometimes called a special excise duty) is an inland tax on the sale of a specific goods often specific attributes of goods sold within an economy. Excise are often indirect taxes that are typically paid by the producer and passed on to the consumer and are added onto a sales tax. In contrast, sales tax is a direct tax- paid by the consumer. The WTO requires National Treatment for excise taxes i.e., that they be applied in a non-discriminatory manner (irrespective of the goods origin or whether imported or domestic). This prohibits discrimination between imported and domestically produced goods with respect to internal taxation or other government regulation. Analysis 20

22 $25,000 $20,000 $15,000 $10,000 $5,000 $21,056 $10,500 $5,600 5,600 Excise Tax (Car 1) NONE 4,620 $3,500 $2,800 2,800 $2,100 $1,400 1,400 $ $- $- $- $- $- $- $- - $- Singapore Malaysia Hong Kong Vietnam Thailand Chinese Taipei Indonesia India (Maharashtra) Brunei Peru Philippines China Russia Australia Canada Chile Japan Korea Mexico NZ USA $80,000 $71,575 Excise Tax (Car 4) $60,000 $40,000 $20,000 $53,750 $45,150 $38,700 $18,920 $17,200 $12,900 $12,900 $10,750 $8,600 $8,600 $5,900 $4,300 NONE $- Singapore Indonesia Malaysia Vietnam Thailand Hong Kong Brunei Chinese Taipei China Philippines India (Maharashtra) $- $- $- $- $- $- $- $- Russia Peru Australia Canada Chile Japan Korea Mexico NZ USA Excise Tax (trk 1) $40,000 $33,937 $30,000 $20,000 $10,000 $18,900 NONE $7,200 $7,200 $4,500 $3,600 $3,600 $2,700 $2,432 $2,160 $1,800 $1,800 $ $- Singapore Malaysia Hong Kong Indonesia Brunei Vietnam India Chinese Taipei Russia China Peru Philippines Thailand Australia Canada Chile Japan Korea Mexico NZ USA (Maharashtra) * Singapore Does not include COE

23 120% 100% 80% 60% 40% 20% 0% 115% 82% 77% 69% 51% Excise Tax as % of Total (Car 1) 29% 28% 24% 20% 16% 16% 11% 1% 0% 0% 0% 0% 0% 0% 0% 0% 120% 103% Excise Tax as % of Total (Car 4) 100% 84% 75% 80% 60% 56% 60% 41% 39% 38% 35% 33% 40% 29% 26% 13% 20% 0% 0% 0% 0% 0% 0% 0% 0% 0% 120% 100% 80% 60% 40% 20% 0% 110% 85% 78% 75% 34% 33% Excise Tax as % of Total (Truck 1) 27% 22% 22% 20% 17% 16% 5% 0% 0% 0% 0% 0% 0% 0% 0%

24 $20,000 $18,052 Incentives (Tax and Subsidy) for a Battery Electric Vehicle $15,000 $10,000 $10,291 $10,040 $9,409 $6,178 $5,000 $3,780 $3,713 $3,500 $- $2,240 $2,100 $672 $280 $140 $105 Source: Various different National sources (Chile, Malaysia, NZ, Peru, Philippines, Russia have no EV tax and subsidy benefits Note: the BEV retail value is stimated to be US$32,

25 APEC Auto Tax Findings Car vs. Truck Taxes can have a significant impact on the composition of the domestic auto market. For example, several economies have adopted tax policies that favor pickup trucks over cars. Overall auto taxes on pickup trucks compared to cars is significantly lower (except Singapore and the USA). The economies providing the biggest tax breaks for trucks are Indonesia, Korea, Thailand, Malaysia, Viet Nam and Russia- with 50% or more lower taxes. 24

26 Conclusions Regardless of the vehicle characteristics the two biggest contributors to the differences in total taxes are Purchase and Border taxes for the first year, but for a 10-year comparison the impact of possession taxes grows. Three auto tax burden categories emerge, often reflecting level of economic development. High middle and low Taxes have a powerful influence on market configurations (e.g., car vs. truck- with trucks tending to be incentivized over cars). As economies move up the development curve, they recalibrate by lowering the auto tax burden and structure helping, not hindering, auto industry global competitiveness (big exception is Singapore). Most APEC economies have tax incentives, with many targeting specific technologies and some based on performance. Performance-based tax incentives, more directly reflecting economies core goals, should be considered above other approaches. 25

27 Tax Incentives: Initial Findings Most APEC economies have tax incentives for New Energy, Alternative Fuel, Fuel Efficient, or low carbon output vehicles. Many target specific technologies, such as: Hybrid EVs, Full Electric vehicles, and a Fuel Cell vehicles. Others target fuel efficiency & carbon output performance. Often economies core goals for auto tax incentives are fuel efficiency, lower emissions (carbon & others), energy independence, or all the above- at the lowest cost to society. Independent experts/studies concur that performance-based tax incentives that more directly link to primary goals are the best practice. This is because it allows new auto technologies and innovations to emerge based on merit, instead of incentives. It can also help avoid technology delays, dead ends, or second-best solutions. Recent studies confirm the superior performance of fuel price increases as the single best means to increase fuel efficiency of fleet. 26

28 THANK YOU Questions? 27