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Sunday, 8 April 2012

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Chambers welcome tax on vehicles

The Business Chambers commended the move by the Government to increase the vehicle import tax which will help bridge the widening trade deficit and address environmental pollution due to vehicle congestion in cities.

The National Chamber of Commerce of Sri Lanka (NCCSL) hailed the recent increase in vehicle import taxes as a move that will save foreign exchange and reduce traffic congestion in cities which contributes to environment pollution said NCCSL Secretary Sujeiva Samaraweera.

He said that while the Chamber welcomed the tax increase as a positive step to address the balance of payment issue it has raised concerns on the injustice caused to those who had already imported vehicles. The Chamber has called upon officials to formulate a mechanism to address the grievances of vehicle importers”, Samaraweera said.He said that the Chamber has called upon the authorities to reconsider taxes on motorcycles which are provided to a large number of private sector employees.

There has been a huge influx of vehicles into the country since the reduction of import taxes on hybrid vehicles in mid 2009.

The staggering import tax was slashed to encourage more import of vehicles for an effective transportation in the country. Samaraweera said that many petrol-driven luxury vehicles such as Prados and SUVs which are not fuel efficient were imported under the previous tax structure.

The NCCSL commended the Government for not imposing taxes on the importation of buses and trucks which are vital for long haul transportation and port activities.

Sri Lanka Chamber of Small Industries President Aloy Jayawardena said that the increase in vehicle importation tax is a sound move to curb trade deficit and reduce traffic congestion. He said the tax on vehicles will discourage importation of vehicles which is vital to reduce the vehicle density on roads.

The American Chamber of Commerce President, Vijaya Ratnayake said .

Vehicle importers said that sales volumes will drop drastically as a result of the increase in import taxes. Industry experts said that auto makers exporting to Sri Lanka will pass on the burden of an import duty hike to consumers.

The Government increased the import duty on automobiles to contain the rising fiscal deficit. The import duty on cars increased from 120-291 percent to 200-350 percent on three-wheelers from 51-61 percent to 100 percent and two-wheelers from 61 percent to 100 percent.

However, duty on buses, trucks and tractors remains unchanged. Sri Lanka is a vital export destination for several Indian auto makers such as Bajaj Auto Ltd and Maruti Suzuki India Ltd.

Bajaj Auto, India’s largest exporter of motorcycles and three-wheeler exported 10,7691 units in the fiscal year ending March 2012, which is a 54 percent increase over 2011.

Reconditioned vehicle importers said that they would have to close down their business making one million employees redundant unless the Government rescinds its decision to impose taxes and other restrictions on motor vehicles.

Meanwhile, there had been allegations levelled against the authorities that the vehicle import tax was increased to please the IMF as one of the conditions of the Monetary Fund to address the balance of payment in the country.

Deputy Secretary to the Treasury S. R. Attygalle said the decision to raise the import tax on vehicles was taken for the economic development of the country. The tax revision was made to tosave foreign exchange and minimise expenditure on fuel.

 

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