Only 6 franchise dealers get car market monopoly, say used motor car dealers
View(s):With used car sales slumping due to the removal of depreciation value concession under the 2014 budget proposal, Sri Lankan used car dealers are going out of business at an accelerating pace, a leading motoring company head revealed.
The tax on the import of a vehicle used between six months to a year will be the same as the amount levied on a brand new imported vehicle under the revised duty structure devised under the guidance of Treasury Secretary Dr. P.B. Jayasundera, he revealed.
“Only six brand new vehicle importers have benefited from this budget proposal and it (has) created a monopoly for them in the market,” he said.
The government has imposed import duty hikes and revised the percentage of taxes on customs value (CIF basis) on duty free permit car imports within a short period of three to six months making the car market unstable, he added.
On top of it, the 2014 budget proposal to revise depreciation value of cars is the final blow against re-conditioned vehicle importers numbering 600 to push them out of business, he opined.
He disclosed that there will not be much of a price difference between a brand new vehicle and a vehicle used between six months to one year due to the revised depreciation value of cars.
The taxes are levied on imported vehicles on predetermined value and the value will come down in accordance with the depreciation.
Under the previous system taxes on six months to one year old vehicles were levied 80-90 per cent tax based on the predetermined value of the vehicle. Under the current revision this value has been increased to 100 per cent and therefore there is no difference in the value of a brand new car and a used car, he explained.
On the other hand the six franchise motor dealers are continuing luxury car imports using duty free /duty slashed vehicle permits issued to politicians and senior public servants, he added.
He asked as to how a government servant who depends on his salary only can afford to buy a luxury vehicle like a Mercedes Benz, BMW, or Prado. So they used to sell these permits to car importers – a practice which has now been legalized, he said. Although the budget technically has not increased any tax on used motor vehicles, the change in the customs duty levying system on imported vehicles means significant increases in the cost of re-conditioned vehicles.