Tunisia Economy: Vehicle sales revenues drop on VAT increase

World
Europe

02:22

Tunisia has endured an economic crisis since 2011 that's affected many vital sectors. These days, car dealers are frustrated by an increase in the Value Added Tax that has also caused a decrease in their sales. CGTN's Adnen Chaouachi has the story.

According to the President of the Car Dealers unions, Sales revenues dropped between 10% to 15%. The numbers of cars being imported has reduced after Value Added Tax was increased.

IBRAHIM DABBECH, PRESIDENT TRADE UNION OF CAR DEALERS "The situation is critical. A 30% reduction in the import quota between 2017 and 2018, a 25% increase in the consumption tax rate on imported vehicles coupled with a 19% rise in VAT affected the sector. We are losing money."

Dabbech added that import quota for 2018 was 45,000 cars. He called on the government and the Ministry of trade to increase the quota.

The Trade Union of car dealers warned that the decline of disposable income for millions of Tunisian consumers pushed sales down. People are complaining about the skyrocketing price of cars in the North African state.

ADEL REZGUI CIVIL SERVANT "Buying a new car is a dream for many people. Getting a car credit is very expensive."

MOURAD HAMDI MERCHANT "I'm taking care of my old car because I don't have the financial means to buy a new one. In the past, it was easy to change the vehicle. Now it's impossible."

Two weeks ago, the Executive Board of the Central Bank of Tunisia has to raise its benchmark rate by 100 basis points from 6.75 percent to 7.75 percent. Analysts believe that car demand will drop again in 2019 due to more interest-rate hikes.

ADNEN CHAOUACHI TUNIS, TUNISIA "The Trade Union of Car Dealers has warned that the depreciation of the Tunisian dinar against the dollar and Euro has ruined many businesses. Economists assert that the dinar will continue its depreciation against foreign currencies. Consequently, the cost of importing and selling cars will be much higher in the next few months. AC， CGTN."