The impact, future and reality

9 April 2012 04:47 am - 0 - {{hitsCtrl.values.hits}}

A A A

In early 2011, the government eased taxes on vehicles being imported to the country. Following the decision made by the government, importers and individuals imported thousands of vehicles into the country. When it reached a peak, the government again increased taxes mainly targeting hybrid vehicles.
This recent tax increase on vehicles had put the buyers in a grave shock, especially due to the staggering increase of taxes for vehicles under the 1300cc category a buyer who is between the middle and the lower class would target to buy.
The increase in tax for vehicles under this category had resulted with the value of the vehicle going up by Rs.1 million. Most of these cars are small in shape and are mostly referred as ‘Hatchbacks’. The price of a family motor car will rise from a minimum Rs.1.2 million to nearly Rs.5 million according to their CC capacity which would be unaffordable for a middle class family.
Heated arguments took place between customers and representatives of vehicle agents in Colombo immediately after they got the news about the tax increase.The charge by the vehicle buyers was that the agents and motor dealers were stocking the vehicles and not releasing them in time as they were aware of the tax increase for what they had paid initial installments.
Most of the people had paid installments in order to buy small family cars under the 1300cc category. They had paid their first installment in November. Since then they had been visiting the relevant showrooms on a weekly basis to check whether the vehicle shipment had arrived.
With the increase in taxes those who had paid for and booked vehicles would have to pay an additional amount which is more than half a million to purchase the vehicle.
When we visited a showroom in Colombo last week following the tax increase, most of them who had paid initial installments were disappointed with the move but were firm in getting the vehicle that they have reserved by paying the first installment.
A representative of a leading car agent in Colombo said once the vehicle arrives at the port it is inducted into the system. Only then is the price allocation given. But he said it was not they who increased the taxes. Therefore the customers need not pick fights with them.
It is also mentioned in the agreement that a buyer signs with the car agent when he or she pays the first installment that prices could change due to unavoidable circumstances.
Some customers accused the company for discriminating customers and alleged that certain customers have been supplied with vehicles disregarding the waiting list. But agents and representatives denied these allegations by making a point that all customers are treated equally.
Having one’s own vehicle is a dream that any individual has. The car market was considered steady with the end of the war as cash was flowing into the country and people were thereby improving the living standards of the people. A person who is well above the middle class is however still able to face any challenge brought up by the government as he is able to raise another Rs.2-3 million more to buy his or her vehicle. But it would be difficult for a middle class person to face the new tax increase put on vehicles imported to the country even if he or she is earning a salary between Rs.50,000 -Rs.100,000.
This would result in the buyer having to wait for at least two years to buy a new vehicle.
On the other hand, the second hand market would also regain momentum in a few months time due to the recent tax increase as people who were once keen on owning a new vehicle would now focus mainly on a second hand Toyota or a Nissan that could be bought between Rs.1.5 million and Rs.3.5 million. However car sales and individuals who were selling second hand Japanese made vehicles which were between five and ten years old would not try to increase prices immediately after the tax hike by the government.
If they do, they would also not be able to sell their vehicles. So they would have to wait until the demand rises and pick momentum to increase the prices. But it is learnt that second hand vehicles would go up between Rs.500,000 and a maximum of Rs.1 million.
It is only a week and few days since the announcement was made by the government to increase taxes on motor vehicles. The market is still silent… waiting for someone to start pricing their range of vehicles by taking the new taxes into account. What happens thereafter remains to be seen.

Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

Comments - 0

Add comment
Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

The impact, future and reality

Comments - 0

Add comment

RECOMMENDED

UDA owned land in Thalawathugoda; UDA Minister Prasanna Ranatunga under the spotlight for forceful occupation of reserved land

Loss-making SMIB faces political pressure in recovering loans

Baltimore Bridge Collapse: MV Dali, SL authorities anchored in mystery?

Has Sri Lanka become a potential hub for the illegal wildlife trade?

Spotlight on Moragahakanda Development Project Moragolla villagers lose livelihoods and down to one meal a day

Ambitious Sri Lankan jobseekers ‘trafficked into Ukraine war zones’

Western purple-faced langurs see blue!

Most Viewed in News

A US “Kaputa”, a Lankan “Nariya” and a Presidential “Feast”

Racing event tragedy leaves seven dead including eight-year-old child

Complaint lodged over Piumi Hansamali's possession of Gota’s Range Rover

New Visa procedure implemented

Sri Lankan among NASA’s new crew for next simulated Mars journey

SL on alert on possible genocide allegations by Canada

MIRROR CRICKET

Athapaththu back atop ICC Women’s ODI Batting Rankings

Chamari Athapaththu sets big goal for T20 World Cup

How does CSK get best out of Pathirana?

Mendis, Mathews move up in ICC Test Rankings

TODAY'S HEADLINES

United States and SL Navy collaborate in CARAT 2024 exercise in Trincomalee

Upcountry estate workers stage a token strike

People have already selected Ranil for Presidency: Prasanna

Construction work for India-funded 10,000 housing units commenced

Sri Lanka secures third spot in South Asian Kurash Championship 2024

Athapaththu back atop ICC Women’s ODI Batting Rankings

Army forms committee to probe Diyatalawa Fox Hill Supercross accident

Indian cricket manager indicted for Legend Cricket League match-fixing allegations