Car recycling tax could stop imports of cars to Ukraine with rise in prices of Ukrainian-made brands, say importers
Kyiv, November 27 (Interfax-Ukraine) – The introduction of a car recycling tax for car importers could lead to a stoppage of imports of cars, and the products of Ukrainian manufacturers that do not pay the tax could get more expensive, CEO of All-Ukrainian Association of Car Importers and Dealers Oleh Nazarenko said at a press conference at Interfax-Ukraine on Monday.
"Of course, before the introduction of the tax, importers will import a certain number of cars so that it will be possible to work, but when the representative offices of the plants make decisions, they will not think if Ukrainians are able to buy cars, the prices of which will grow by UAH 30,000, they will simply take cars to Germany or the United States and sell them there. Imports to Ukraine will stop," he said.
CEO of Nissan Ukraine Andriy Nesterenko has the same opinion.
"Some cars will be imported, but if the tax is not canceled, we'll have to include it in the price of cars and simply stop importing them. Someone will say: there will not be some car brands… One should not forget that the Nissan brand, for example, has 35 dealers and 80 people work at each center – 3,000 people will lose their jobs," he said.
Nazarenko said that after the introduction of the recycling tax products of Ukrainian plants producing cars under the full cycle would grow in price.
"Everything is done to remove rivals and increase the price of [the country's] own products and earn money," he said.
Nazarenko also predicted that there would be certain problems in international relations.
"I'm sure that in the coming month Ukraine and Russia will sign an agreement on the mutual non-application of the tax, and then it will occur that our lobbyists will introduce the tax for Japanese, German and other imported cars. Russia introduced the tax as an additional protection for plants of these foreign brands – 28 foreign plants operate there – and we don't have them," Nazarenko said.
Taking into account the violation of the national regime (the absence of equal rules both for manufacturers and importers), Nazarenko forecast that the World Trade Organization (WTO) could impose certain sanctions.
"Everybody understands that the WTO will not play with us if we continually violate the rules – in this case the national regime, when the rules are to be equal both for importers and manufacturers. There is a decision of a meeting of the European Automobile Manufacturers' Association [ACEA] that if the sanctions are introduced, they will demand that their governments introduce sanctions against Ukrainian exports," he said.
Nesterenko said that it is likely that those plants that carry out CKD (Сomplete Knock Down) assembly, and which perform hidden imports, will be exempted from paying the tax.
"The rules should be equal for everyone. A serious program on the use of the funds should exist. Today the situation is unstable, and any additional tax could take the system out of the balance," CEO of AWT Bavaria (BMW) Oleksandr Tymofeyev said.
As reported, the Ukrainian parliament on November 20, 2012 passed at first reading a bill on the car recycling tax, and manufacturers producing vehicles under a welding-painting-assembly cycle are exempted from paying the tax.
The similar tax is in effect in Russia from September 1, 2012.
At present, Ukraine and Russia have agreed to quickly draw up a temporary agreement on the mutual non-application of the tax over six months.