3 August 2018 09:49 am
Finance and Mass Media Minister Mangala Samaraweera yesterday said the vehicles below the engine capacity of 1000 cubic centimetres (cc) still remain more affordable compared to 2014, despite the recent duty hike.
Illustrating an example he said that Rs.1.65 million was paid as duties on a Suzuki Wagon R in 2014, whereas even with this week’s hike, the duties on a similar vehicle only amount to Rs.1.25 million. The Finance and Mass Media Ministry this week increased the import duties on vehicles less than 1000cc up to Rs.1.5 million, while the tax on hybrid and electric vehicles less than 1000cc were increased up to Rs.1.25 million.
Reasoning the recent duty hike, the minister elaborated that 24,000 small cars were imported to Sri Lanka during the January-May period, following the introduction of the new engine capacity-based duty structure, which made under 1000cc vehicles much more affordable.
He said this has resulted in a large-scale foreign exchange outflow, contributing to the devaluation of the rupee against the US dollar.
“Small vehicle imports flooded into the country like a tsunami,” he said.
Samaraweera pointed out that the expenditure on vehicle imports has almost doubled (YoY) during the first five months of this year to US $ 666 million compared to US $ 316 million in the same period, last year.
He also drew attention to the increasing traffic congestion on the country’s road network.
“If the vehicle imports continue to grow at the same rate as it did in the early this year, Sri Lanka would have been ended up becoming late 1990’s Bangkok, where you had massive traffic jams even during midnight,” he said.