(June 01, 2010, The reduction of duties on motor vehicle imports has pushed the law makers of Sri Lanka to exhaustion, sources say. The axe came as most of them were preparing to import cars for reduced taxes. Earlier the MPs could import a car once in five years totally duty free but now the government has planned to impose a tax of around 15%.
it is open secret that most of the MPs either ruling party or opposition sell their vehicle permits to a handsome easy income that ran into several millions of rupees. With the reduction of taxes bt 50%, the MPs also lose half of their quick bucks from vehicle permits.
The government reduced the excise duty on imported vehicles by 50% and removed a 15 percent surcharge on all imports while reducing duty on electrical appliances since June 01.
With effect from yesterday, a car such as an Indian-made Maruti, which had attracted excise duties of up to 183% of its value, would now be charged a duty of 90%, Director General of Fiscal Policy S. R. Attygala said.
Cars attracted over 300% in excise duties, import duties, value added taxes, port and airport development levies and national security levies.
The government hopes the tax cuts will pick up the imports and help revive revenues which had suffered due to high taxes last year. The trend was out in the open in Colombo Bourse in which the share prices of companies importing motor vehicles were upbeat.
The finance ministry in a report issued under country's fiscal responsibility law in February said excise taxes on motor vehicles alone which had been 18 percent of the total in 2007 had fallen to 3 percent by 2009.
In 2007, the government had raised 17.4 billion rupees in motor vehicle excise duties. In 2008 car excise had fallen to 11.06 billion rupees and in 2009 to 3.25 billion rupees.
In November 2007 Sri Lanka had registered 26,100 new vehicles including 2,300 motor cars. In November 2008 only 20,500 vehicles were registered and car registrations had fallen to 965.
In November 2009 vehicle registrations had stabilized at 19,300 but cars had plummeted further to 329.