On June 1, the government slashed duties on imported motor vehicles and electronic devices, but the tax cuts have yet to be reflected in current market prices for these items.
The tax on motor vehicles has been cut by 50 per cent, and the tax on branded electronic items by 10 per cent. The electronic items range from mobile phones, cameras and wristwatches to radios, televisions, laptops and refrigerators.
In addition, the 15 per cent Customs duty surcharge has been removed.
The duty structure has been simplified to a four-tier structure of 0, 5, 15 and 30 per cent, and the 2.5 per cent import duty on most raw materials, plant and machinery has been abolished. These items are exempt from VAT and Cess, and will be liable for only a Port Levy and a Nation Building Tax.
Meanwhile, auto dealers have welcomed the tax cuts on motor vehicles. “We are very happy,” said Colombo Motor Traders' Association vice-chairman Tilak Gunasekara. "The President has kept his promise."
He told the Sunday Times that the association had met the President in January to discuss the import taxes, and that the President had promised to look into the matter once the general elections were over.
Mr. Gunasekara, who is also co-managing director of Sathosa Motors, says the prices of Associated Motorways (AMW) cars will come down significantly. A Rs. 5 million Nissan would soon be priced at Rs. 4 million, he said.
Western Auto Lanka chairman Suren Abeyasekara told the Sunday Times that the tax reduction would "boost development in the transport industry."
Meanwhile, importers of electronic items are discussing how to revise their prices. Consumers who can afford a Rs. 30,000 rupee refrigerator, a Rs. 25,000 television and a Rs. 6,000 radio can look forward to g the 10 per cent cut in retail prices.
K. D. Ranasinghe, chief economist of the Central Bank of Sri Lanka, told the Sunday Times that the tax cuts would result in increased imports. |
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