Call to reduce duty on vehicle imports

By Lalin Fernandopulle

The Ceylon Motor Traders Association (CMTA) in its 2014 Budget proposals has called upon the government to bring down the age limit to import used cars from two to one year and commercial vehicles from three and half to two years, CMTA, President, Tilak Gunasekera said.

He said that by implementing the proposal the government will save foreign exchange and enhance foreign reserves which will help reduce the trade deficit.

The country's trade deficit has widened due to falling export revenue during the past two years.The Association proposes a single depreciation slab of 10 percent for motor cars instead of the current two slabs comprising 20 percent from six months to one year and 10 percent up to six months.

A CMTA official suggested that tax payers be given Duty Free import permits for cars at the same concessionary level of 60 percent offered to public servants enabling them to import either petrol or diesel vehicles with maximum engine capacity up to 2000 CC. The permits should be given every three years to taxpayers who pay over Rs. 400,000 as income or payee taxes annually. The present incentive given to tax payers is not attractive as permits are issued only after 10 years with a 1600 CC engine capacity ceiling and tax concession of 25 percent.

A public servant is eligible for an import permit after around six years of service with a 60 percent concession on 1000 CC cars, 1000-600 CC - 65 percent, 1600-2000 CC - 70 percent, 2000-2600 CC - 80 percent and over 2600 CC - 100 percent.

Gunesekera said incentives of this nature will help increase the number of tax payers and revenue to government coffers.

The CMTA has called upon the government to reduce the excise duty on trucks which is exorbitantly high. As a result of the high duty, import of trucks has dropped drastically over the years.

The import of trucks dropped from around 10,000 in 2010 to around 7,500 last year. The duty on imported trucks was increased from 27 percent to 43 percent early this month which is the highest in the world. The tax on trucks in Japan, Singapore, Malaysia and Pakistan is around seven percent.

Lorries and trucks are vital for ransportation of goods. The purchase price of trucks has increased as a result of the high import duty which will be passed on to the customer.

“The number of unroadworthy vehicles will increase leading to environmental pollution if there is no incentive for traders to import new vehicles,” Gunesekera said.

The import of brand new and reconditioned vehicles of all categories dropped by around 25 percent from January to July this year. The tax on 1000 CC - 2000 CC petrol cars is 200 percent, over 2000 CC - 250 percent and over 3000 CC - 275 percent. Duty on diesel vehicles below 1500 CC - 250 percent, 1500-600 CC - 250 percent, 1600-2000 CC - 76 percent, over 2000 CC - 300 percent and over 2500 CC - 351 percent.