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Sri Lanka raises automobile import taxes
31 Mar, 2012 11:58:44
Mar 31, 2012 (LBO)- Sri Lanka has slapped new taxes of as much as 100 percent of import value on some imported cars, but raised taxes on hybrid cars at a lower rate, in a move which can reduce state revenues from automobiles this year.
Sri Lanka's finance ministry in a notice on its website said total taxes on imported hybrid cars has been raised to between 60 to 125 percent from the current 51 to 100 percent based on engine size, mostly from excise levies.

Taxes on petrol-driven cars have been raised from the current 120 to 189 percent of value to 189 to 275 percent, depending on engine size.

Taxes on diesel cars have been raised from the current 180 to 191 percent to 250 to 350 percent.

Taxes on petrol vans have been raised from the current 103 to 172 percent range to 125 to 200 percent.

Taxes on diesel vans have been raised from the current 112 to 291 percent to 125 to 350 percent.

Taxes on petrol-driven three wheeler vehicles have been raised from 51 percent to 100 percent, taxes on diesel three wheelers from 61 percent to 100 percent and electric three wheelers from 27 percent to 50 percent.

Taxes on double cab pick-up trucks have been raised from between a range of 93 to 110 percent to 150 percent.

Motor cycles taxes have been raised from 61 percent to 100 percent.

Sri Lanka's ordinary citizens pay very high taxes on cars, while state workers get tax-slashed cars. The countries elected ruler class gets completely tax free cars.

The finance minister said a surge in imports of cars had created congestion in roads and a higher demand for fuel.

Sri Lanka ran into a balance of payments crisis in mid-2012 due to low interest rates and high central bank accommodated credit growth as well as credit taken to manipulate oil prices as well as general deficit spending by rulers.

A cut in vehicle taxes brought billions of rupees in taxes for the state as car purchases by citizens soared.

Sri Lanka has been plagues with balance of payments crisis from soon after independence from British rule after a money printing central bank with a so-called soft peg was created, abolishing a currency board or hard peg that kept the exchange rate stable and trade fee.

In Sri Lanka motor cars and oil imports are "usual suspects" for foreign exchange shortages.

LBO's economics columnist fuss-budget who predicted the current balance of payments crisis last year said authorities had a history of imposing controls on citizens instead of correcting their own policy mistakes.

"In Sri Lanka it may include curbs on car imports by raising taxes on cars or letter of credit margins on cars and other imports," fuss-budget said at the time in the column BOP 101 -Sri Lanka can avoid currency trouble with consistent policy.

Taxes on alcohol and cigarettes have also been raised.

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READER COMMENT(S)
14. mw Apr 03
Our politicians have such a thick skin, and no brains.
13. LGNALH Apr 03
Another fantastic move by the government who's said to be masterminding one of the fastest growing economies in Asia (not sure how many would believe these craps uless you are a mindless idiot to say the least !), one more step towards the miracle of Asia. A 30000 USD Toyota Allion 260 would go beyond 75000 USD with the new scheme, 1.5 times of the price of a Land Cruiser 4000cc from Toyota.
12. Observer Apr 02
My dream car is eternally out of reach. Its high time these self proclaimed pundits in parliament are given the boot. Unfortunately my fellow countrymen are so ignorant come election time they will do the same mistake again.
11. bandula sir Apr 01
Oh dear, how are we to live on 2,500 rupees a day now?!
10. Saman Apr 01
Minister getting Tax Free Car but ordinary SL ppl buy highest vehicle price on earth.
9. Chaminda Apr 01
Just to satisfy the people during election our head of the state has gave a speech on when they reduce the tax% on vehicles and few months down the line it raised worst than before. our foolish Sri lankan still do not understand any shit. our country is having huge debts to the world simply because of our MF polititions at present. they just wont to borrow money and do the projects which gives no return. we are a stupid nation and spineless monkeys.

We are not a great nation at all,just a bull shit. our main expenditure is to maintain a huge bunch of buffaloes in the parliament. secondly the government sector. think a Minuit, all these for what? it is just to maintain the party of politics and their voting base. at large all of the Sri Lankan suffers.

8. Rohith Apr 01
Owning a small vehicle is every young person's dream. What we have is taxation without representation. A car is NOT a luxury but a necessity in this day and age. Our taxation rates are comic by international standards.

Here in Australia a brand new Toyota Camry is only AUD 29,000 while a Corolla is AUD 22,000. I bought a used 2010 model Camry with just 30K on it for just AUD 17,000 (Rs 2.2 million) But the irony is that all the political thugs will be driving in luxury cars without paying a cent in taxes while ordinary citizens have to suffer.

7. Lanka Kolla Apr 01
These guys are destroying the country. Taxes will kill the economy. Tax the common man, tax free for politicians, decision makers and members of powerful trade unions. Way to go. Keep this up. Country is going down the hell. Feel sorry for the common man
6. Bandara Mar 31
This is ridiculous. I we have the highest vehicle price on earth now. Our politico's thinking is that they should have all the luxuries (That's why they have permit) including vehicles. Others who work and contribute to the economy should only eat and live a mundane life.
5. Kosala Mar 31
This is the worstever government of policy making, the so called people's friendly government has no clear cut rules whatsoever, true enough the government faces tough BOP crisis , but this over night rule kills thousands of people involved in this business.

Sri lanka's failed financial cheep did this mistakes many times , he should have given some excuse at least for the cars already ordered or L/c's open, this is really ludicrous , the country heading soon to Ethiopia or Somalia, yes, this is just start , pl tighten your belts , the show is just started and many more to come down the track, the Wonder of Asia is just knocking the doors of everyman in SL.

4. Arvindra Narayan Mar 31
From time to time they raised taxes by increasing tax and excise duty on vehicle import, liquor and cigarettes. These so called pundits do not know other way out to tackle the economy. Easy money comes from easy sources. They are fail to collect due tax revenue, custom duties, excise levies . They never worry about to reform our tax system, administration system, whole public sector governance system to reduce corruption and wasteful expenses.

Now corruption and waste are on the rise. Poor people have to pay all these loses and wastages. These politicized decisions take the economy nowhere. When they want to import luxury cars for political henchmen they reduce duty rates. I think now they all have imported enough cars for them. Public transport is a shocking experience for ordinary people. They do not have a genuine interest or workable plan to improve public transpiration. Now they talk about luxury transport services. Average people can’t now buy even a motor bike. Can a reasonable person agree on these contradictory policies?

Sir, please resign with pride if you can’t take better decisions in country’s favor than satisfying cheap political needs.

3. Luxshman Mendis Mar 31
The taxes on imported vehicles were reduced for no reason 2 years back now Rajapakse and his clan has got down all what they wanted at reduced rates. Hello Srilankans get ready for the push bicycle or bullock cart ride. jaya wewa. Luxshman
2. jay Mar 31
Recently I heard one government minister told that epact workers are "Rata Viruvo". These Rataviruvo got a "Upahara" recently by totally suspending their long time previlage to send a vehicle to their family under Gift scheme. A known fact that most of foreign revenue is coming from Middle East countries, and this Gift scheme is the only practicable way to get a low tax used vehicle.

The other method available is (use 2 years in country of work & send to SL) not practicable as all the vehicles registered here in ME is LH driven. It is very unfair to suspend first scheme while some government workers and law makers getting maximum privileges from our hard earn monies.

1. CarBoy Mar 31
There they hit the brick wall!
such lunetic decision makers driving this country's economy == soon we end up no where other than hell!
People get ready. This is just the beginning .. the worst part in on the way! Miracle of Asia!