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Sunday, 16 November 2014

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Vehicle importers hail 2015 Budget:

Call to reduce tax on hybrid vehicles and trucks

The 2015 Budget is favourable to the country's motor trade which has faced tough times, said vehicle importers.

However, they said that certain amendments to the tariff structure should be made to boost sales of all categories of vehicles and reduce the colossal drain of foreign exchange on fuel imports each year.

Immediate Past President of the Ceylon Motor Traders Association (CMTA), Tilak Gunasekera said that the 2015 Budget has offered many incentives for the motor industry but certain rectifications in the duty structure will help promote the use of more eco-friendly vehicles and enhance government revenue.

The tax reduction of only three percent on hybrid vehicles which are environment-friendly vehicles will not help to create a clean environment. The duty on hybrid vehicles was slashed from 60 percent to 57 percent.

On the contrary he said that the duty on petrol vehicles was reduced by 27 percent which will result in consumption of more petrol and increase fuel imports.

The duty on hybrid vehicles should have been further reduced to promote an eco-friendly transportation system.

Policy makers have been lobbying for more eco-friendly vehicles which will help reduce environment pollution.

The import of petrol vehicles will increase with the reduction in duty enabling people to purchase more private transport vehicles.

Vehicle merchants hailed the move to reduce the duty on electric vehicles from 38 percent to 25 percent which will help to save fuel and check carbon emission. Sri Lanka spends a staggering amount on fuel imports for transportation and industrial operations each year.

Associated Motor Ways (AMW) Managing Director Samantha Rajapaksa said that the 2015 Budget addresses the need to make vehicles more affordable through the tariff reduction on vehicles below 1000 CC.

He said that the simplification of the tax structure for the motor industry should be commended.

"There will be an increase in vehicle sales except for commercial vehicles such as trucks for which the import tax has been increased from 43 percent to 57 percent which is a 14 percent increase. Trucks are used for transportation in mega construction projects which has trickle-down benefits to the economy. The increase in the duty for commercial trucks will adversely impact imports and hamper growth in business activities," he said.

Vehicle importers said that vehicle registrations which dropped in October will pick up with the benefits of the Budget coming into effect soon.

Vehicle registration in October dropped from around 940 units to around 630 units.

“We hope to see sales recovering with the reduction in the duty and rectifications in the tariff structure for hybrid and commercial trucks coming into place,” the former CMTA President said.

The sale of dual purpose (commercial) new vehicles dropped from 739 units in the first nine months last year to 657 in the corresponding period this year while dual purpose reconditioned vehicles dropped from 2,589 to 1,379 units. New motor lorries dropped from 2,776 to 2,115 and recondition lorries from 664 to 586.

New motor cars increased from 7,203 last year to 7,604 this year. Recondition vehicles increased from 10,977 to 16,132. New motor cycles increased from 11,7977 to 15,3609 and reconditioned vehicles increased from 2,519 to 4,352. New buses increased from 1,176 to 1,864 while reconditioned buses dropped from 153 to 149.

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