Vehicle Exemptions
Jose S. Azcona Bocock
Any exemption or preferential tax treatment has multiple negative effects on the financial situation of the State. The effects of inefficiency, perception of abuse of influence, economic loss, demoralization of public officials and employees, and loss of credibility among the population are difficult to deny.
One of the most controversial tax exemption systems is that of vehicle exemptions, which are used by deputies of the National Congress, and organizations that with or without justification have access to them. We propose the abolition of this exemption scheme for the following reasons:
It is estimated that each legislative exemption results in an average revenue loss of around L.350,000 (37% of the value of the vehicle, import tax plus sales tax). If we calculate two exemptions per congressman (as in the previous period), owner and alternate, it gives us an amount of 512 in a period of 4 years. This represents a loss of internal tax income of L.180,000.00. If we add the other institutions, companies, car rental companies, Honduran diplomats abroad, foundations, etc., that have access to them and that in many cases are vehicles for the use of Honduran citizens, we discover that the collection deficit is much bigger.
Any negotiation by public servants of their perks with private companies, such as vehicle distributors, has the effect of leaving a false but harmful impression on public opinion of something improper. If the reason for this legislative exemption is insufficient remuneration, the commercial value of these exemptions can be calculated (much lower than what the State ceases to receive) and added to the legislators’ salary.
The problem is not limited to the Legislative Branch. Many institutions should not have a justification for obtaining vehicles without paying taxes, and those that do (with the exception of diplomatic missions accredited in the country) can be given a credit or refund similar to that made for tax on sales. This is a useful example, since changing the exemption card to a refund or credit application reduced the enormous tax fraud resulting from the unscrupulous use of these exemptions.
Our diplomatic officials abroad and Hondurans who work for international organizations should not have direct access to these benefits. If the problem is the remuneration of our diplomats and consular officials, their salaries should be reviewed.
By eliminating this system of exemptions and opening tax credits to those who need them, we would reduce bureaucracy and the cumbersome procedures related to it. We would set a pleasant precedent for public opinion that in Honduras we are all equal, and with the respective salary adjustments we would avoid financially damaging the beneficiaries. Therefore, we propose the elimination of the importation of exempted vehicles by any individual or Honduran institution and its replacement by alternative compensatory measures as necessary.
(2005, HC)
