Outdated taxes and financial pressures are making it impossible for South Africa’s middle class to keep pace with car ownership costs.
It is sobering to realise that the cheapest new car on the market in South Africa today is a shade under R180 000… or just under six times what the equivalent entry-level vehicle would have cost 30 years ago.
That’s because inflation and our arthritic rand have taken their toll but also because, according to Toyota SA CEO Andrew Kirby, the government continues to levy an outdated “ad valorem” tax on all new vehicles.
The tax was originally intended to apply to luxury products, including vehicles, electronic equipment, cosmetics and perfumes.
Presumably that was a way the government – the National Party one, it must be said – wanted to discourage excessive “wasteful” spending.
Nowadays, according to Kirby, the tax is artificially pushing up the price of cars.
ALSO READ: SA middle class lives on borrowed time
He also put in a plea to the authorities to lower taxes on locally manufactured cars, to enable local makers to compete with the flood of Chinese imports.
We would go further to say South Africans – especially from the struggling middle class – need to be educated about getting in over their heads financially with car purchases.
Too many of us do this to “keep up with the Joneses”.
Taxed or not, cars will cost you a lot of money.
