The tax on luxury cars could be bound to their price

Government is going to bind the tax on luxury cars to their price and variants with a capacity and engine volume remained.

According to the newspaper “Vedomosti” with a reference to its sources, it is only on very expensive cars, criteria should be thought out. According to officials, the form, in which the tax is to be realized, was not decided yet: it could be as transport tax, so state duty on transaction registrations and import duty.

President Vladimir Putin charged to enter the income tax for overconsumption for expensive cars – it was in the pre-election articles and in an "inaugural" decree. Ministry of finance submitted to the government amendments to the Tax Code that in 2013 it will be introduced an additional transport tax for cars with an engine capacity over 410HP that were produced after 2001.The rate grew from RUB 15 to 300 for 1HP. For example, the new basic tax could be RUB 168,000 against RUB 84,000 in Moscow at the present time (the region has a right to raise this rate, maximum 10 times). According to estimation of Ministry of finance, fees could be up to RUB 3,000,000,000; for comparison: fees of transport taxes were RUB 83,200,000,000 in 2011. 

But amendments proposed by Ministry of finance were not taken before December 1st and it means that there won’t be a tax on luxury cars the next year. According to Federal official, who took part in the discussion, the government didn’t like the idea with engine power over 410HP because not all these cars could be considered as luxurious. The idea of tax reference to the price of car was also discussed by Ministry of finance but there is a problem of such data verification by taxmen, he explained. 

The price of car is more objective criteria that the engine volume, said the Deputy Chairman of State Duma from “United Russia”, Sergey Zheleznyak (according to income statements for 2011 he has a collectible Chrysler Prowler). The tax should not forbid, he supposes; cars of average class should not be luxurious. Russians should not be forced to abandon from expensive cars, taxes on expensive property are profitable for a budget, Mr. Zheleznyak is sure.

The binding to the price is the right approach, supposes Igor Malyarov, the owner of “Pelikan-primary” (dealer of BMW). There won’t be problems with price reducing as 99% of new cars are imported by subsidiaries of car makers, he remarked, and they won’t reduce prices because their price-lists are in the customs, for example. 

According to Mr. Malyarov, we could talk about a luxury car from the price of RUB 3-4,000,000, closer to RUB 4,000,000. He supposes that the rate of additional tax could be, for example, unified with the tax on property to understand that it was taken not from air.