The representatives of the Vehicle Importers Association of Sri Lanka (VIASL) say that the ‘duty increase outlined in Budget 2019, will result in vehicle prices rising sharply’.
VIASL President, Ranjan Pieris told a press conference in Colombo last week, that they are concerned with the government’s proposed taxes.
“These taxes impact many popular vehicle models,” he said and warned of a potential slump in the industry. The association looked for relief from the taxes and potential regulatory changes on the loan-to-value ratio used in financing. “We are concerned with the wider ability of the public to purchase They were dismayed with the proposed new luxury tax. The proposed amendment to the luxury tax will exponentially increase the cost of luxury vehicles.
They did concede on questioning that such a tax proposal helped reduce tax and value disparities between vehicles of the same engine size.
Two vehicles of the same engine size can have significantly different values. The VIASL argued that the luxury tax rise was too steep. They noted that on a Range Rover the luxury tax would increase prices by about Rs 17.5 million. The proposed tax works on a threshold basis wherein the value exceeding the threshold has a luxury tax placed on it. Commenting on the secondary market, Pieris said the tax rise would take time but would increase prices systemically in the economy.
The association is of the view that most modern electric cars would fall into the luxury tax bracket.
Pieris said he hoped the industry would be able to discuss tax structures more closely with the Treasury. They argued that tax volatility was harmful to their business and market confidence.
“We feel the government should outline the tax stance for a period of at least two years.” VIASL welcomes discussions with other stakeholders on the matter.
Finance Minister Mangala Samaraweera told a press conference on Thursday, “The government had revolutionised the way vehicles are taxed, shifting from CIF value based taxation to engine capacity taxation.”
“The revision of the excise duty will have a minimal impact on smaller personal vehicles. The 200% cash margin requirement on motor vehicle imports will also be removed soon,” the Minister said.