A motoring group yesterday urged the Government to rethink plans to revamp the car tax structure, warning that the changes would lead to a slump in car sales and showroom job losses.
The Hong Kong Automobile Association said proposed changes to the first registration tax on cars, which would remove the exemption on car accessories and warranty services, would lead to a rise in new-car prices.
The group's warning followed a meeting on Monday with the Principal Assistant Secretary for the Treasury Esther Leung Yuet-yin.
The association said it had accepted, in principle, the abolition of the tax exemption on accessories - such as air conditioners, audio equipment and anti-theft devices - and warranty services.
As part of the revamp, the Government is considering reducing the overall progressive tax rate on new cars. The association said the changes would still result in a huge increase in tax payable on most vehicles.
The rise also would be the result of the car's new taxable total value falling into a higher tax bracket, the association said.
The impact would be apparent among low- and medium-priced vehicles, such as a 1500cc Toyota Corolla or a 2000cc Honda Accord, as they may experience an average rise of 60 per cent on tax payable and 12 per cent on purchase price.
