Budget 2016:

Bleeding the vehicle importers

by Dhaneshi Yatawara

The tax hike on vehicles will have an adverse impact on the industry if the Government fails to take steps to address the issue, President of the Vehicle Importers Association of Lanka Sampath Merenchige said.

He said if the industry is hit it would not only affect vehicle importers but also those employed in the industry which comprises around 50,000 people.

Even though there does not exist laws to streamline vehicle imports Merenchige said as a body comprising vehicle importers they are in agreement of a pattern depending on the market demand. " The tax increase will definitely limit our market and we will fully collaborate with the government if it could put an end to irregular vehicle imports," he added.

"Those who import vehicles evade paying taxes by showing the authorities that importatios and clearing were not for sales but rather for personal use. Thereby they sell vehicles for a low price than the professional importers," Merenchige said.

Merinchige said it would be difficult to sustain business which will collapse due to the high taxes.

The Vehicle Importers Association of Lanka comprises over 300 members.

"We are running a business with employees. We pay EPF, ETF and allowances to employees. But many who import vehicles and sell do not have these obligations and their overhead cost is low," he added.

Traffic congestion in cities and environmental pollution have been attributed as reasons for the tax increase on vehicles by the government. The Government plans to limit vehicle imports until the chaos on roads is sorted out with an effective traffic plan in the country.

"The Government must focus on promoting vehicles with new technology that minimises pollution. The electric car prices have been increased under the new proposed tax scheme," Merenchige said.