Vehicle merchants expressing concern over the rate at the cost of vehicles would rise as the country opens the gate again for imports said, having far too many taxes at staggering rates will not serve any purpose other than discourage people from purchasing a vehicle.
The Government is to permit the import of vehicles after a lull of nearly five years. The ban was imposed to curtail the outflow of foreign exchange as the economy went into a tail spin.
The Gazette on various excise duties applicable to vehicle categories was announced by the Government last week. Excise duties under the new tax structure range from 200% to 300% for vehicles that are not over 10 years old from their date of manufacture. The duty rates are based on the engine cylinder capacity and motor power, as detailed in the gazette.
The Vehicle Importers’ Association of Lanka (VIAL) President Indika Merenchige said the Government should shift its vehicle import policy to enable a reasonable and an affordable vehicle to many rather than a few wealthy people who have been dominating the personal vehicles segment.
He said the Government can save large amounts of foreign exchange and gain more revenue from taxes by permitting imports of only quality used-vehicles for the next couple of years.
“VIAL has been harping on a change in vehicle import methods for some time and we hope it would heed to at least some extent,” Merenchige said.
According to data, each year foreign exchange to the value of about USD 1.25-2 billion leave the shores on import of cars.
Merenchige said that such large amounts of foreign currency leaving the shores could be channelled to import less than 10 year-old vehicles from Japan which has good roads and vehicles in good condition.
He said the prices of vehicles could be far less if used vehicle between 7-10 years are imported.
Ceylon Motor Traders’ Association (CMTA) Immediate past Chairman Charaka Perera said that the Association had several rounds of discussions with the Government on vehicle imports to ensure the members, the motor industry, customers and the economy at large benefit.
“We want to assure that all stakeholders benefit from the new duty structure due to come into effect shortly. The CMTA proposed a reasonably higher duty component than what was prevalent in 2019 and bring it down on a quarterly basis so that it comes to the same duty structure within six to eight quarters giving time and space for owners of used vehicles and leasing companies to adjust.
“We need to look at the welfare of the members who suffered heavily due to the economic crisis and import restrictions and the growth of the industry,” Perera said adding, that the Government also must be careful while wanting to boost tax revenue not to have heavy outflows of dollars due to the pent up demand following a lull of nearly four years.
The CMTA said that measures need to be in place to ensure that the used vehicle market does not crash when new vehicles come into the country at the prices equal that of used vehicles and the import of vehicles is regulated.
Ashocars Japan (Pvt) Limited Chairman Ashoka Herath said if the Government can come up with a round figure of around Rs. 2 million which includes all duties for a car, even an average income earner can go for vehicle.
He said if five-year old vehicles in good condition from Japan could be imported it will help save a large component of the foreign exchange.
“VIAL has called to increase the regulation to import three-year-old vehicles to six years so that a vehicle could be bought for around eight lakhs from the auction,” Herath said.
A senior official of the Ministry of Finance said the duty structure for various categories of vehicles have been introduced to rationalise imports so that it supports the industry and the economy.
