EV Club highlights shortcomings in budget proposals on electric car taxes

By Chandeepa Wettasinghe 

While the budget 2018 has promising policies with regard to making electric vehicles (EVs) popular, it simultaneously has handicapped the ability to reach the set target, according to EV Club Sri Lanka. 

“There were some promising policies and direction in the budget to further popularize EVs, but the target set can’t be reached, because of some obstacles present in the budget itself,” EV Club Co-Founder Mahisanka Abeywickrama said during a press conference held yesterday in Colombo. 

EV Club Committee Member Jaanaka Wimaladharma noted that with the revised tax structure, while EVs with a motor of around 50kW has a clear benefit in taxation over a hybrid vehicles, EVs with a motor between 100kW-150kW will attract a similar or even higher tax rate than hybrid vehicles.

“So, for a person looking to buy a family car which could be used for a variety of purposes, all the EV models now and going forward will have a 100-150kW motor, and they may not pick an EV,” he said.

He said that brands available in the 50kW range are mainly Indian and Chinese small cars which could only pass off as secondary vehicles to be used in cities, while the popular Nissan Leaf and other offerings with similar capabilities now have a 100-150kW motor.

“So we request that the 50-100kW tax bracket bet extended from 50-150kW,” Wimaladharma said.

Meanwhile, Abeywickrama also said that having the low duty structure for brand new and 1 year old EVs and double the taxes for older vehicles is a policy made with incorrect information.

“Maybe they were influenced by people who said that importing older cars will result in having to deal with old batteries. Yes, the batteries can be toxic, but the solution should not have been to discourage imports of old cars. The old batteries could have been used at home to store solar power, recycled, or exported. The government should incentivize that,” he said.

Wimaladharma said that the request of the EV Club is for the tax cuts to be also effective on at least cars that are 2 years old.

“The current proposals need to be relaxed significantly. During 2015, when there was a favourable tax environment, around 3,500 EVs were imported. Even if 10,000 are imported annually, it won’t be enough to reach the government’s goals in the next 20 years, when there are 700,000 vehicles in the country. So further incentives are required,” he said.

The government’s policy is to have only electric and hybrid vehicles operating by 2040.