CB advocates cutting vehicle imports
View(s):The Central Bank (CB) has stressed the need to clamp down on vehicle imports as it is affecting the country’s Balance of Payment (BOP), the CB Governor Indrajit Coomaraswamy told a media conference recently.
He noted that the country’s banking regulator is very concerned about the increase in motor vehicle imports despite measures taken to bring down car imports, he said.
Motor vehicle imports grew by 117 per cent in February 2018 from a year ago to US$121.5 million, latest trade data showed.
In the first two months vehicle imports rose 77.9 per cent to $208.8 million.
“Car trade behaviour can be an important sign of a recovery in economic activity and credit as Sri Lanka emerges from a balance of payments crisis recently,” another CB official said, adding that despite heavy taxes on vehicles, imports have increased.
The Vehicle Importers Association of Sri Lanka (VIASL) said that the unit rate tax for vehicles with an engine capacity more than 1000 cc has increased. Its former president Indika Sampath Merenchige said that the prices of all vehicles starting with the 1000 cc engine capacity have increased.
He added that the tax alone on a three wheeler is close to Rs. 400,000, tax on a Toyota Prius which was Rs. 3.3 million, had increased to Rs. 7.2 million and the tax on XL vehicles had increased to Rs.8 million from 4 million.
The tax on a Maruti Alto which was Rs. 800 000, will increase to Rs. 1.2 million. However, he said that the price of vans and trucks will not change. As no tax has been introduced for those classes of vehicles, the old structure will remain.
Therefore, a limited number of vehicles with an engine capacity of less than 1000 cc need to be imported to the country in the future.