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| Sunday, 24 October 2004 |
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Vehicles dearer by Hiran H.Senewiratne and L. S. A. Wedaarachchi The increase of Excise duty on all imported new and reconditioned vehicles, by the government has resulted in a major price hike in all vehicles, importers complain. The objective of this Excise (Special Provision) Duty is to curtail foreign exchange drain out of the country, Director of the Fiscal Policy department of the Ministry of Fiance S.R. Attigala said. He said that increase of this duty will not affect vehicles that are categorised as commercial vehicles, agricultural vehicles and transport vehicles. "This increase will mainly serve the purpose of saving foreign currency reserves with the increase global fuel prices and to control the heavy number of vehicles that are added to the road network annually," Attigala emphasised. According to the new duty structure all petrol vehicles, which were earlier subject to 25 per cent Excise duty, will now be increased based on the engine capacity. ie- a normal vehicle under 1000 CC engine capacity by 30 per cent,1000-1500 CC vehicles by 40 per cent and 1500 CC and above by 60 per cent. Diesel vehicle Excise duty, which was only 65 per cent until last week has also increased its duty, based on engine capacity ie- below 1500 CC vehicles 95 per cent and 1500 CC and above engine capacity will levy duty of 115 per cent.Vans were also subjected to 48 per cent Excise duty are now being structured based on categories of normal van 60 per cent,semi luxury van 72 per cent and luxury type 84 per cent. Ministry of Transport sources point out that this duty increase is justifiable, since the number of imported vehicles available in the country are sufficient for the next three to five years. Apart from the Excise duty, the government is also charging Custom duty, Surcharge and Value added Tax Duty for all imported motor vehicles. This Excise duty would apply to all luxury and semi luxury vehicles in contrast to all commercial vehicles, which are excluded form this new tax structure, Attigala added . Many people predict that prices of all vehicles will increase especially the normal vehicle, which they anticipate a price hike by a couple of hundred thousands. Vehicle dealer cum senior committee member of the Vehicle Importers Association S.H.M Zakir blames the government that they had increased the duty without any indication or consultation with the vehicle importers. Mercantile Investment Ltd Deputy Chairman Gerald Ondaatjie said that, price of an average motor car has been increased by rupees three hundred thousand, which is a huge amount. He said that the government increased the Exercise duty without prior notice to vehicle importers, which is an unfair situation . This would mainly affect the small players, as most of them don't have money to clear vehicles from the Port. "The government should have given the time to clear inventories for those importers,whose vehicles are stuck in the Port," Ondaatjie stressed. United Motors Deputy General Manager Chandima Jayathilake said that new excise duty is too much and it would mainly affect users.This will also not facilitate the trade in the country by and large. Jayathilake said that his view was to remove all unroadworthy vehicles from roads and allow new vehicles enter the market,instead of increasing duty charges. According to a spokesman of Toyota Lanka Ltd, the cars available at the time of tax increase were sold out without increasing the prices, as it should be. Brandnew cars as well as used cars were available with Toyota Lanka Ltd by the time of Tax increase. At present they are empty handed and are expecting a new shipment. The attractive Indian small car "Tata Indica" importer, Diesel and Motor Engineering Company (DIMO) spokesman said, that the price of "Tata Indica" will increase only by Rs. 75000/= (Seventy five Thousand) The price of other brands handled by them will be announced later according to him. In the meantime some of the second hand car importers from Japan tentatively have stopped their car dealings until the finalization of the prices. Some second hand car importers who had already announced their prices, had increased their price range from Rs 150000/= to Rs. 550000/=. According to the car sales centres, few prospective buyers visited their places during the last few days. It seems that the buyers are also studying the market trends. The said tax increase has not affected the motor cycles, trishaws and vehicles used for the transportation of goods and people. |
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