THE COST OF IMPORTING A SECOND HAND CAR BEFORE & AFTER LUNGU, A COLLAPSED ECONOMY
We would like to illustrate to you what happens when a country’s economy is mismanaged.
This simple illustrative example will show you just how bad things have become.
We would like to show you what the cost of this Toyota Allion was in January 2015 and how much it will cost you to import the same vehicle today.
The cost of a motor vehicle is dependent on two factors ;
1: The USD exchange rate.
2: Motor vehicle import & excise duty.
Let’s now look at comparisons before and after Lungu.
JANUARY 2015
This Allion is $2400 CIF from Japan to Dar Es Salaam.
Exchange Rate in January 2015= K6.4/ $1
CIF Price = K15,360
Customs Duty 25%, Excise Duty 20%, VAT 16%
Total Taxes = 61%
K15,360 X 61% = K9,370
TOTAL COST OF VEHICLE = K15,360 + K9,370 = K24,730
You could have imported this car for only K24,730 in January 2015.
JUNE 2020 (5 YEARS LATER)
Exchange rate K18.2/ 1$
Import Duty K26,100 ( In 2018 ZRA introduced a fixed duty in bands on imported cars, which was a substantial increase in duty)
CIF Price $2,400 X 18.2 = K43,680
Import Duty = K26,100
Total cost of vehicle = K43,680 + K26,100 = K69,870.
Same vehicle, same USD price but you see the difference in actual price before and after Lungu ?
The difference is an astonishing K45,000.
The kwacha has collapsed and they increased the import duties in 2018 making it extremely expensive to import a second hand vehicle.
All this can be attributed to bad economic management that has crippled the kwacha, and Irresponsible debt contraction by the PF government that is now putting pressure on ZRA to increase tax rates.
Copyright @NDCMEDIA 07.07.2020