Tax hike on commercial vehicles sparks confusion in the automobile market
View(s):Sri Lanka’s commercial goods transportation has been hit badly following the budget tax revision on vehicle imports that sent the automobile market into confusion over the past three weeks, according to Ceylon Motor Traders Association (CMTA) officials.
While bringing down taxes on petrol cars by 25 per cent, the taxes on trucks were increased to 57 per cent from 43 per cent without any basis, immediate past president of CMTA Thilak Gunasekera told Business Times.
Owing to this, prices of small lorries and commercial trucks used for goods transportation will go up by Rs. 200,000 to Rs. 300,000, he added.
He noted that with the tax increase on small lorries and trucks the expansion of the goods transport fleet would be hindered as the demand for these vehicles will drop considerably.
He disclosed that the Treasury has also increased taxes on cement mixtures to 127 per cent in the 2015 budget but later reduced it to zero per cent (while the budget debate is on) following representations made by motor traders to the Treasury. Mr. Gunasekera said that he has brought to the notice of Director General Fiscal Policy of the Finance Ministry in writing on the discrepancy made in introducing tax cuts for vehicle imports especially in the commercial vehicle segment.
The transport and logistics sector is important for the Sri Lanka economy as it impacts the country’s transportation of agricultural produce from the fields to retail shops.
The efficiency and effectiveness of this sector can translate into an increase in productivity of the economy and facilitate faster economic growth, he pointed out.
He emphasized that the Treasury has marginally reduced taxes on hybrid cars as well as diesel vehicles while reducing taxes on petrol cars. This move will prompt vehicle importers to bring down more petrol vehicles impacting the country’s foreign reserves and the economy within a short period, he added.
CMTA President Gihan Pilapitiya told the Business Times, that the association has informed the Treasury Secretary Dr. P.B. Jayasundera in writing on the importance of reducing taxes of trucks. Until 2013 there was no Excise duty for trucks. A 29 per cent excise duty was imposed for this segment of trucks in 2013 expanding the selling prices. There was no VAT on trucks until now but the new tax had not taken into account this fact and the new slab is expanding prices further, he said adding that the Treasury should rectify this matter as it would negatively impact on the economy.
The increase in truck taxes will naturally increase the cost of purchasing new vehicles for transport operators who run small fleets of trucks as well as larger logistics operators, he pointed out. This will impact on re-fleeting ageing truck and lorry fleets of smaller operators throwing them out of business, he reiterated.