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Sri Lanka raises taxes on imported vehicles
25 Apr, 2011 12:54:40
By Jayantha Kovilagodage
Apr, 25, 2011 (LBO) - Sri Lanka has raised import duties on several categories of petrol-engined cars and three wheelers with steeper increases seen in larger hybrid vehicles, which had exceptionally low taxes earlier, officials said.
A senior Treasury official said there were revisions on several categories of vehicles.

On petrol cars with standard engines with capacities below 1,000 cubic centimeters the effective total tax rate will go up from the current 95 percent to 120 percent.

Between 1000 to 1,600 cc the effective rate will go up from 119 to 128 percent. On three wheelers the effective rate will go up from 38 percent to 50 percent.

On hybrid cars with engines below 2,000 cubic centimeters total duties will go up from 38 percent close to 50 percent.

Deputy director general of customs Ajantha Dias said an excise duty was raised by 8.0 percent on small hybrids but it will take up the total duties by a larger amount when added together.

On hybrids between 2,000 to 3000 cc duty will go up close to 75 percent and above 3,000 cc to 100 percent.

At the current rates even the large hybrids are taxed at a lower rate than smaller petrol cars.

Update III

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32. Amith Apr 29
NEW Car Prizes

Alto 1,378,000.00

Maruti 800 - 1,100,000.00

31. sltk2004 Apr 27
This is a very good move by the government. I am sure this will be fully endorsed by majority of the people in the next election.
30. meerkat21 Apr 27
Thilanga et alia:
Governments work on the assumption that..

1. People who buy cars and other vehicles have money- obtained legally or otherwise.

2. And at least some of them have money because they do not pay the correct amount of taxes... or not pay at all. This accusation is backed up by data from the revenue collections department. ( I can name a few billionaire businessmen-- and others-- who pay only a fraction of their tax liabilities, flouting tax laws openly!)

3. Increasing the cost of motoring will help to
a. reduce petrol imports and reduce CO2output.
b.Encourage people to cycle and walk( Colombo ladies are getting fatter at an alarming rate!) therby improving health, reduce obesity and diabetes

We should encourage people to utilise their time, money and energy efficiently - instead of running around in cars for trivial things. (This is the case especially with those who employ drivers).

Here are a few ways to cut your transport costs, save money, improve your health and reduce environmental pollution- all at the same time

1. Walk or cycle as much as possible
2. Reduce Car trips by using a courier for deliveries of small packages and documents. If you live out of Colombo, Courier companies will charge only RS. 150-200 to deliver a 1/2 kilo package. They pick it up from your doorstep and deliver it to any address in Colombo in the same day
4. Buy a Multi- Function Printer/copier/fax -take my word. It will improve your efficiency and save you money ten fold! Dump that mobile!!. You can by a good MFC for Rs 18,000 and you will save that money on one year!! 5., Plan your trips - minimum of stops
6. One - Stop shopping . Stop in one place and do all your shopping, etc. This is now a reality in Kandy where the City Centre shopping Mall houses almost all the outlets and banks ( 10 plush banks on the ground floor!) you will need for your daily needs. ( I am thinking of moving to Kandy just because of this)

3. Plan your trip- go clockwise if you have to do several stops- taking left turns as much as possible so that you don't have to go across the road( illegal in many countries) blocking the traffic - traffic blocks wastes petrol - and return in a clock wise fashion

7, Car sharing is a good option. We do it very often

8. Use the internet to pay bills instead of running around to pay bills

Buy a computer ( ADSL line)and an MFC printer- and dump that mobile! wont regret it!

29. meerkat21 Apr 27
The Good....
Most of the cars imported from from Japan are insurance write -off s. Others include stolen cars. Admittedly most vehicles are safe with non- critical repairs -but other vehicles are dangerous( two halves welded together - easily done in front drive cars as there is no transmission tunnel to rear.

The Bad ....

This legislation will stop the import of Tsunami cars( and there are a lot of them in factory parking lots) with minor damages.

The Ugly....

Non- tax payers will continue to get Tax- free luxury cars.

On the other we shouldn't grumble -- government doctors and other officials had to work very hard( un-paid overtime) during terrorist attacks ( suicide bombings) and during the latter stages of the war setting up refugee camps, looking after them etc.

-- It's a lot of work.

28. Mahisha Apr 26
@Nawshad: The "increase" in profit of your new dolphin will have to be ploued back to buy another more expensive vehicle. Sorry to burst your bubble, but if you plan to sell and buy another vehicle sometime in the future, you really haven't made a profit!
27. Bun Key Moon Apr 26
Govt. should ban used car imports completely.

Reduce taxes on Limousines and Luxury Vehicles.

Increase Road Tax (revenue license) substantially.

Also Give tax free permits to politicians and government servants.

Tax the poor to subsidise the rich!

Oops the Govt. should also increase petrol prices substantially.

Perhaps put Kalmadi incharge of policy, couldnt do worse.

26. Nawshad Apr 26
Its ok. last year due to sudden tax cut, i have sold my dolphin buy 5 laks loss, today gov increased tax. so now my present dolphin get hight value. yesterday i was sad. today iam happy
25. Saman Hettiarachchi Apr 26
That is a very bad decision taken by the government without any prior notice.I heard that government top monitory officials said that there wouldn't be any changes on tax even in media discussions.Where are those puppet now.

What will be the hopes of poor people.What we feel is that there were some people who wanted to buy vehicle who has connection with government,they have achieved so it is over.

24. Nicole Phillips Apr 26
To answer a question raised early in this forum...

the tax is with effect from midnight 24th April as per last nights news...

as usual everything in the wrong direction... the eco friendly cars should not have been touched in my opinion...

23. Reality Apr 26
The answer is very simple, the local agents of Hybrid cars do not wish spend money to upgrade their repair facilities to maintain Hybrid vehicles so they manipulate the govt officials to raise the duty in order to discourage the import of Hybrid vehicles. Cutting the nose to spite the face as usual.
22. don miracle of asia Apr 26
Govt. Is behaving like Pettah Mudalali las. It is a grate pity on the middle class people. This Idiots in the Parliment they never want to allow people to have their basic necessities. If govt. really want to develop this country they should not play like mudalalilas.

Govt is making every thing under confusion. They must stick to a steady development plan for this country. Govt. must explain why they wanted to increase tax once again. What is the actual reason behind this tax increase. Have the govt fulfil all the general living conditions of a normal income people. People of this country has suffered enough due to many bull works of many rulers of the country.

Govt. Pls see the possibilities to uplift the living conditions of the people of this country. Govt ! Please Do not try to squeeze the neck of middle class/

21. CNA Apr 26
This is hopeless. What will happen to all the buyers who already paid deposits for agents. At least government should give us a time frame!!!
20. Thilanga Jayasinghe Apr 26
Government issue 220 luxury car permits to the people who already has number of vehicles. The common man collects money, dreams about a new car(in my case an echo friendly hybrid) and suddenly faced with the increase of taxes by the government. This is bullshit!!!! No wonder the educated, innovative and hard working people leaves this country.....
19. Shan Apr 26
Well well well ..., Increasing the tax is some what acceptable from any government. But sudden notice for a duration ... How policy makers can be this much cruel.This is extremely cruel and extremely devastating.
I loss three of my valuable Japanese partners and they loss millions of yens. I am really sad about them after Earth quack and Nuclear disaster. Every week 100,000 of vehicles selling in Japanese auctions and every body in Sri Lanka knows that Sri Lankans are also buying a good portion of it. What will happen to the people who paid deposits/ Japanese Agents who buying on request for Sri Lankans ?

These kind of sudden decisions won't be good for international trading.

If officials want to know which vehicles bought during last week please use this link***%2C1%2C2%2C3%2C3.5%2C4%2C4.5%2C5%2CR%2CRA%2CS&mode=statsearch&sort_field=&sort_order=&limit=20&view=auctstat

LBO, thanks for informing us about the government decisions. Please inform officials our feedback on this duration matter and how it affected to the SL people/ Japanese Agents/ SL agents.

Thank you very much

18. Susantha Apr 25
This is really really a sad decision by the Government. ( I am not talking about the tax increase. But the emergency notification of the duration period) Today several people came to BOC to open LC for the vehicles they bought during past 2,3 days. But they wont able to open them due to new 2 year rule.

Most sad thing is they have paid advances through pay pal to the Japanese Agents.

Yes. It is not legal, but no car owner or agent buy vehicles from auctions unless they got at least 10% of the price. That is the real and practical situation when any one going to buy a vehicle from Japanese auctions. You won't get anything better from a seller. So those who have paid advances will have to forget their money.

It was not surprise to saw them with tears from government's sudden announcements. To order a Prius you have to pay 10% of the Prius price (more than 140,000 JPY,SLR 200,000 ). Government should care about these things when they announcing such a notices. 2 laks is huge. Even top people can't bare these kind of loss. So how the middle class people can bare it ?

17. seberet Apr 25
When the whole world is moving towards encouraging eco friendly cars (hybrids), SL moves the other way!!!!!!!PLs let us know the reasons behind this move? CB, MOF?
16. fb Apr 25
Thanks EconoCautious. Shafraz the problem has little to do with MR except indirectly. Raising taxes outside the budget was started I think by NM Perera. Please correct me if I am wrong somebody.

The 1970s was a period where we lost a lot of freedoms. The key institution that protected the liberties of the people (and the dignity of the public servants along with it) was the public service commission of the earlier constitution. The Republican constitution made us a subjugated people. The 1978 constitution reduced us to virtual slaves. Public servants were made in to rulers servants. People like Dr Kelani Silva is running amok like a minor despot thanks to that. The 17th was supposed to reverse it. The 18th amendment made it worse.

There are further injustices in this matter. The state workers get cut priced cars. MPs get completely tax free cars. To regain lost freedoms we need to overhaul the state, like people did in Europe.

Blaming MR and replacing him will not solve any problem. The next guy in all probability will be worse and you will be wishing it was MR.

The barons got the king to sign the Magna Carta mainly because he imposed half dozen taxes without consultation. Freedom will not be given. The history of free countries have shown that freedom came from institutions of liberty built by sections of society that understood the problem and the solutions.

Changing leaders, majoritarianist democracy is not going to give it to us, because it has not happened elsewhere. Institutions were undermined and majority vote fascist-nationalist arbitrary states were built also by educated people both here and in Western Europe.

15. Mahisha Apr 25
This is absurd: laws are made, changed, used and abused without proper long term thought (or even short term thought?)), or input from the public at large - even when needed (pension bill).

Institutions created with great foresight such as the Lakshman Kadirgamar institute are just lying there, and not being used for the intended purpose.... sigh.

14. Chat Apr 25
Please specify the day this tax raise is going to effect.
13. lion Apr 25
Okay, its for small petrol cars up to 1600cc. Not for luxury one's. Thanks MR.
12. Nihal Apr 25
OH MR what have you done ?
Today I have bought 2008/3 car and paid advance of 3 Laks. Now it is only allowed to bring vehicles not older than 2 years. Now how can I bring paid car to SL ?

Do I have to give up my money to the Japanese agent? Pls help me to suicide

11. Siripala Apr 25
IT seems as though all this govt. can do is dream up new schemes to take away money that the average person works hard to earn. I already feel "punch-drunk" to let down and someone trapped, being too old to leave the country and start up somewhere else.

I dought the public will rise up - through lack of organisation, increase state control and instead will continue to moan and administer self therapy [as I do here]by ventilating the sorrow/anger through comments such as these.

10. sharfraz Apr 25
Apppreciate the honesty 'fb' , but come on.. ur talking like these guys are the devils. we had our break. too much of anything is good for nothing.

we are not alone in this world.. there are people in countries far far worse off than us. so take it easy. i'm just happy its this n nothing worse. This government... well the the president ateast, has done more for our country than most otherr presidents have dont for theirs'

we are the 2nd fastest growing economy in asia. its a long journey and we hav just begun.
chill everybody

9. TheEconoCautious Apr 25
Fb, I don't think anyone can explain the mechanism and the objective better than you.

Good governance always requires a government to subject these decisions to a long consultation process and tax people, as the Buddha said of the kings of Lichchavi clan, like the bee which sucks the nectar without harming the flower.

But in a developing country like SL, who cares good governance? It something which the media and politicians have attributed to a conspiracy of the powerful western nations. So, the ordinary people like parrots swallow it wholesale.

As the comments below have displayed, people will look at it how far these arbitrary decisions have hit their neighbors of whom they cannot suppress their envy.

8. N Ratnayake Apr 25
No wonder FDI's are dying up. Ad hoc policies. More brain drain will take place. PBJ said otherwise but he has now broken his promises. Lies, lies and more lies in addition to all the heavy taxes. How can we rely on this economic system?
7. fb Apr 25
Shafraz no warning will be given. An arbitrary state essentially operates by making the lives of citizens uncertain and making it difficult to plan long term.

No public consultation, no warning nothing. Midnight gazette. You wake up find find out that the state has pulled the rug out from under you.

Remember you are viewed as an object for taxation by the state. The ruling classes themselves get tax free cars. You are there to pay taxes so that the state can be expanded and you are available to be oppressed.

In an orderly state taxes are raised in budgets because that give a one year planning horizon for citizens. You can plan import stuff and refrain from importing near the budget in case you do not want to take a risk. That is how free countries operate. But Sri Lanka is an arbitrary state where nothing is certain and you are a second class citizen. We have lost these essential freedoms.

But do not take up arms against the state. The state will kill you with arms bought from the the taxes charged from you.

6. sharfraz Apr 25
Can't really say i'm surprised. it had to happen some time... just that they should have at least given us a warning.
5. siri Apr 25
Dhuppath minisunta cars wala yanna dhenna hoda naha. Thawa tax wadi kararanna ona.
4. Fonseka Apr 25
Good. I can sell my vehicle now. Thanks Mahinda.
3. Jeew Apr 25
Since when?
2. Lahiru Apr 25
Me too
1. DillonDP Apr 25
Ohh i am screwed :(