The car prices of local joint ventures will go down, that�s just a dream to the majority of consumers.

Ministry of Finance has reduced import tax of completely built cars form 80% down to 70% and despite strong criticism from consumers o­n public media recently.

In reality, joint ventures have no reasons �for being forced to reduce� the prices of the cars they manufacture, because they�re under no pressure, esp. when their buyers are waiting in long lines to buy the cars.

In the meanwhile, businesses don�t import kinds of cars that local joint ventures are manufacturing. The simplest reasoning in this case is that the absolute tax is stipulated to base o­n engine capacity, regardless of the brands. Any importers, therefore, are inclined to importing high-class car lines for selling and earning big profits so that it�s worth their import effort.

The fact that o­nly Mercedes-Benz Vietnam decided to lower their car prices or launch new models with competitive prices like C-Class is due to the o­nly reason that the manufacturer�s cars are being directly competed by completely built imported high-class car lines that are increasingly pouring in. Therefore, it�s difficult to compete without reducing the price.

It�s not reasonable to wholly blame manufacturers for consumers� worries about domestic car prices being higher than car prices o­n overseas markets, because car prices are under the adjustment of tax policy.

If import tax, special consumption tax, value added tax that each under-five-seat car has to bearas regulation are added, the total amount will account for 48% of car cost.

Simply put, if a car costs 10,000 USD, 4,800 USD of which will be paid for taxing.

Therefore, according to specialists, the simplest solution to lower the car prices is to cut down o­n the taxes, especially special consumption tax, instead of calling for collaboration from manufacturers (who are intent o­n gaining profits). However, it�s no simple task to reduce tax.

Import tax o­n completely built cars of under five seats was committed to be reduced to 52% after 2012. However, this cannot be done all of a sudden, but there should be appropriate steps, especially when tax reduction was from 90% down to 80% since the beginning of the year until recently, and to 70% last August.

Last year, statistics from General Department of Taxation showed that the tax contribution by automobile joint ventures to state budget has accounted for 20% of the revenue from foreign-invested sector (regardless of gas petroleum) for the past few years.That figure seems very impressive o­n the first hearing, but the comparison between ten foreign-invested factories manufacturing, assembling cars with the number of over 5,000 foreign-investedprojects in effect can point out more clearly the turnover of this industry.

Insufficient statistics from Vietnam Automobile Manufacturers� Association disclosed that all kinds of taxes that members of VAMA had to submit had reached more than 1.2 billionds USD from 2000 to the first six months of 2006.

Therefore, whenever there are signs of freezing o­n domestic market, or car sales don�t go well, it�s not just the grief of the car makers, but also the �concern� of customs sector.

The fact that Vietnam is presently a member of WTO also means that the import tax of many kinds of goods will be lower than before. This, for a certainty, will force customs sector to have careful considerations over calculations of raising revenues for state budget, especially the considerable revenue from automobile businesses.

Therefore, according to specialists, taxation agencies should consider reducing tax to a level that can guaratee income, doesn�t cause mutation in traffic jams, at the same time doesn�t put consumers at a disadvantage.

�We should gradually consider cars as a normal means of transportation, not as a luxury property that has to undergo special consumption tax because cars are going to function like motorcycles. The Government should pond over reducing special consumption tax because it has direct impact o­n consumers�, said Mr Do Huu Hao, Deputy Trade Minister.

Obviously, if cars are regarded as a normal means of transportation, there is great likelihood of traffic jams in big cities because the infrastructure development cannot catch up with people�s car puchase speed. This also poses a pressure for upgrading the quality of infrastructure.

In another aspect, completely built cars import tax reduction can possibly make automobile enterprises enhance manufacture to compete with import o­nes or completely shift to importing completely built cars.

Both cases are advantageous, for those enterprises that can survive and enhance manufacture will have an opportunity to transform into a new stage of development, together with the strengthening of accessories industry. In case of importing completely built cars the revenue for state budget is still guarateed.