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New luxury tax on vehicle imports if manufacture cost exceeds Rs.3.5mn: importers

8 March 2019 07:23 am - 10     - {{hitsCtrl.values.hits}}

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The Vehicle Importers Association of Sri Lanka (VIASL) yesterday said, for the first time in the vehicle import history, a new luxury tax has been imposed apart from the Customs duty, if manufacturing cost of a vehicle exceeds Rs.3.5 million. 

Speaking to the media yesterday, VIASL Chairman Ranjan Peiris said this new procedure has been introduced along with the new budget proposal which was presented in parliament.

“After converting the manufacturing cost of a vehicle into Sri Lankan currency, and if the value exceeds Rs.3.5 million, all the vehicles will fall under the luxury tax. Most of the vehicles used by the ordinary people such as Toyota Premier, Toyota Axio, Honda Vezel, Toyota CHR and Honda Grace fall under the luxury tax category,” he said. 

“As a vehicle importer, I do not see these vehicles as luxury ones. Luxury vehicles which have engine capacity of more than 1800cc, contain more options and higher in value. This new luxury tax may have been imposed accidentally or by mistakenly by the Finance Minister. He has to look into this issue from the people’s perspective,” he said. 

“We think the Minister would take steps to release the vehicles used by the ordinary people from this new luxury tax. As an association, we are not against imposing a luxury tax on actual luxury vehicles. 

But this was not fair. According to the new luxury tax, Rs.1,240,000 would have to pay as a luxury tax for a vehicle with a 1,000cc engine capacity in addition to the manufacturing cost. Even the permit holder has to pay the luxury tax according to the vehicle they order,” Mr. Pieris said. 

Due to the new taxes, vehicle imports have been decreased by 65 to 70% and simultaneously, the vehicle sales also suffered a sharp decline. While imposing new taxes, the government may have been trying to limit vehicle imports. According to the new mechanism, the new luxury tax is imposed on electric cars too. 

The newer electric cars that can run for 300 km are very expensive and Rs.2 million luxury tax was also imposed on those. Therefore the new tax system needs to be streamlined. The tax revision of the imported vehicles would affect the second-hand vehicle market in the future. (Chaturanga Samarawickrama)

Pix by Nisal Baduge

  Comments - 10

  • Sambo Friday, 08 March 2019 07:48 AM

    The majority of the public are not worried about the price of vehicles. The roads are already overflowing with vehicles, and yes we need to slow down the import of vehicles to this country. On the other hand our selfish politicians kills the public with taxes. We have to pay the sins of the politicians stealing. Only talk and nothing improving and ever will.

    Yana Friday, 08 March 2019 08:02 AM

    I feel so sorry for these long suffering vehicle importers. They're doing it so tough eking out a miserable living!! If they're so concerned about the public, why don't they cut down on their enormous profit margins? Don't worry, your economic genius president will look after you and change the tax system. This country needs a leader who can curtail the import of vehicles. The average person can't afford a vehicle but the Finance companies don't give a damn, They lend money to people who can't afford to pay back. When they default on their loans, the vehicles are repossessed.

    Jaliya Friday, 08 March 2019 08:09 AM

    Everything is a luxury in sri lanka including your suit and the colorful underwear designed by Mangala that you are wearing. Soon there will be taxes on the rain water, Sun light and wind ... we have too much of everything .... but not enough brains.

    ANTON Friday, 08 March 2019 08:13 AM

    I DON'T MIND INCREASING ANY TYPE OF TAXES, I HAVE ALREADY PLAN TO BUY A PUSH BICYCLE. I CAN ENJOY WEEKENDS RIDING ON IT SMOKING BEEDI AFTER A COUPLE OF KASSIPPU SHOTS.

    BusMan Friday, 08 March 2019 09:48 AM

    The vehicle import does not see a car worth Rs.3.5 million as a luxury car. The term luxury is relative. For me who travels in a lorry with seats fitted Rs.3.5 million is luxury. The government needs to improve public transport and further increase taxes on cars, bikes, vans and tuk tuks.

    lal Friday, 08 March 2019 09:54 AM

    I do agreed this car importers are Mafia association. They make on behalf of people "Crocodile tears" They can reduce their profit margin. They are not human beings Pls think about the next birth

    Yehiya Friday, 08 March 2019 10:25 AM

    Vehicle is not effort-able middle class. Its correct bring under luxury. Public transport development is the most people wanted.

    HP Friday, 08 March 2019 05:02 PM

    “After converting the manufacturing cost of a vehicle into Sri Lankan currency, and if the value exceeds Rs.3.5 million the Luxury tax applies. In the tables given none of them show the manufacturing cost but provide the luxury tax. Something is wrong some where

    M. Afzal Friday, 08 March 2019 07:50 PM

    Vehicles are owned by a few. Our roads cannot take the influx of vehicles. Our country s unable to pay its debts. Why pay for the luxury of owning a vehicle for a few - probably a hundred thousand or less. The balance millions pay for the sins of these few. there should be no tax free vehicles for any one. The money should be diverted towards a better public transport including buses, trains, taxis. look at Singapore as an example. Its a first world country but even the rich dont own cars

    avian Friday, 08 March 2019 08:11 PM

    These taxes are OK, otherwise there wont be enough space for all the vehicles in this tiny country!


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