Senior Multimedia Reporter
It has been three years since Prime Minister Dr Keith Rowley said he would have Cabinet consider putting a cap on the average exemption on motor vehicles for MPs at $350,000 but then made an about-turn on the matter after seeking legal advice.
“In terms of exemptions on motor vehicles, I too am concerned because if those exemptions are being used for the purpose for which they are meant, I have no problem. But if they are being used to facilitate other people in the way that they have been, then they require to be looked at,” PM Rowley had said in October 2020.
But, just months after, on July 10, 2021, at a COVID-19 press conference, PM Rowley revealed that despite his statement in Parliament that he would consider reviewing the matter, he had sought legal advice and could not interfere with it. “I sought legal advice, and the legal advice was these are people’s terms of engagement, and you have no authority to interfere with it,” he had said.
Years later, this issue remains contentious, as during the three years, ordinary citizens have spent approximately $732 million on motor vehicle taxes and duties–about $234 million in motor vehicle taxes and duties in 2021, about $231 million in 2022, and a projected $266.6 million in motor vehicle taxes and duties in 2023, according to 2023 budget documents.
Citizens also owe more than $3.8 billion in outstanding vehicular loans to commercial banks as of 2022, according to the Central Bank’s July Economic Bulletin.
The cost price of a vehicle attracts Value Added Tax (VAT) at 12.5 per cent and motor vehicle tax, which is charged based on engine capacity–with larger engines attracting a higher tax, while import duty depends on the vehicle’s engine capacity and fuel type.
In 2021, Opposition MP Dr Roodal Moonilal had raised the issue of government MPs acquiring tax-exempt vehicles during the COVID-19 pandemic given the number of people out of work as a result of restrictions. But this elicited the response from PM Rowley that he had no authority to interfere with exemptions granted to parliamentarians.
In the furore at the time, PM Rowley admitted that he too had purchased a vehicle, but did not disclose the type and the tax exemption, adding that he drove himself around so that he does not lose the skill.
“I accept the terms of my engagement and if it disturbs some of the people, I am sorry, but I don’t think it is fair for somebody to tell me what to do with what I earn when you have no interest in talking to those who have stolen public money,” he had added.
PM Rowley noted that the tax exemption is part of the terms of engagement of thousands of different people at different levels.
In September 2022, Opposition MP David Lee was arrested and charged with conspiracy to defraud and misbehaviour in public office in connection with the purchase of a $2.3 million Mercedes-Benz. The accusations are that the $1.4 million in tax exemptions derived may have benefited a UNC party financier. Lee has denied any wrongdoing, saying he is the victim of a PNM political ploy.
In 2022, Local Government and Rural Development Minister Faris Al-Rawi was cleared by the Trinidad and Tobago Police Service (TTPS) of criminal wrongdoing following an investigation into the sale of a Porsche to former Police Service Commission member Roger Kawalsingh. Al-Rawi was accused by the Opposition of failing to transfer the vehicle to Kawalsingh and failing to notify the Transport Commissioner of a change of ownership. The TTPS said there was insufficient evidence. Al-Rawi denied any wrongdoing.
SRC’s recommendation to cap exemptions rejected in 2014
The topic has been controversial for some time, with the SRC (Salaries Review Commission) issuing a recommendation to cap the exemptions in 2014, only for their attempts to be rejected by both sides of the political divide.
“We maintain the view that there is a need for rationalisation of the facility given the significant monetary value of the exemptions for which certain office holders are eligible, totalling several hundreds of thousands of dollars on a single vehicle, depending on make and model and this sum could potentially increase in the event that higher taxes and duties are imposed on motor vehicles,” the 100th report of the Salaries Review Commission stated in October 2014.
In 2017, a media report revealed some of the exemptions MPs received on their vehicles via a series of Freedom of Information requests. Among the things revealed was that Finance Minister Colm Imbert was exempted from paying more than $550,000 in taxes in total on a Mercedes-Benz purchased in 2010 and Porsche purchased in 2015 and that Opposition Senator Wade Mark was exempted from paying more than $1 million in taxes in total on three Toyota Prados between 2010 and 2015.
In 2020, however, the issue returned after Imbert in his budget presentation announced the removal of tax concessions on the importation of private vehicles. He also announced that the permissible age of imported vehicles was to be reduced from four years to three years, as well as a reduction in the importation quota by 30 per cent In justifying the move, Minister Imbert said there were too many cars in the country, with the importation of vehicles causing a substantial leakage of foreign exchange. He approximated the value of forex leakage at US$400 million. Used-car dealers condemned the move, while well-known economists said that the sector was not a major user of forex–estimating that it used around seven per cent of the country’s foreign exchange needs.
In 2020, leaked documents showed that several government ministers received more than $7 million in exemptions between 2013 and 2020. The documents showing the exemptions received by opposition members were not leaked. In response to the leak, Prime Minister Rowley initially defended his Cabinet, saying there was no real public concern about the issue.
All MPs are exempt from paying motor vehicle tax, customs duties and VAT on used or new vehicles imported every two years under the SRC. However, the vehicle is not supposed to be sold during the two years or half of the taxes are due to be repaid.
The Sunday Guardian recently made a Freedom of Information request seeking the values of exemptions received by MPs since 2019 however, this has not yet been received.
31,099 new vehicles registered in T&T between 2020 and 2022
According to the Central Statistical Office, the number of new vehicles registered in T&T between 2020 and 2022 was 31,099. Between 2020 and 2022, 9,047 vehicles were sold commercially, while 18,850 were sold privately.
According to the CSO, between 2020 and 2022, the country spent more than $113 billion (US$16.7 billion) in imports. Of that figure, approximately 5.4 per cent, $6.2 billion (US$920 million), was spent on vehicles and vehicular parts.
Between January and August 2023, according to the CSO, there was US$4.2 billion worth of sales of foreign currency to the public by authorised forex dealers. During the same time period, US$3 billion worth of purchases by the authorised forex dealers from the public was recorded.
Importation of vehicles
According to the United Nations Conference on Trade and Development (UNCTAD) Automated System for Customs Data (ASYCUDA)–an integrated customs management system used globally, including in T&T, 13,008 motor vehicles were imported in T&T in 2021. Of that figure, according to Minister of Trade and Industry Paula Gopee-Scoon speaking in 2022, 2,292 were foreign-used vehicles. According to the Observatory of Economic Complexity, an international data visualisation website that compiles 50 years of international trade data including subnational level data, T&T imported more than US$174 million worth of cars in 2021. It found that most of the cars were imported from Japan, followed by Thailand, South Korea, India and Germany.