President Vehicle Importers’ Association of Lanka (VIAL) Indika Sampath Merenchige said the budget had not provided any relief to vehicle importers after sales plummeted by nearly 80 percent on high taxes and a weaker currency as the government tackles pressures on the balance of payments.
Speaking to journalists yesterday the VIAL President said the association had met with Treasury Secretary Dr. P. B. Jayasundera seeking relief in the 2013 Budget.
"Our requests were disregarded and the end result was that VAT and EBT were increased further instead," Merenchige said.
Taxes on vehicle imports remained at 200% on an ascending scale considering engine capacity of each vehicle. Maximum duty is now enforced which has stultified sales, he said.
Although Merenchige did not pointedly say that reduced sales could lead to other problems, he said, in answer to questions from the press, that as an organization if they did not have vehicles to sell, they could always diversify their enterprise to other areas.
However, importers of vehicle body parts for assembly and sales gained because of reduced duty on such imports.
Present at the press conference were Dushan Asanga, Ruchira Kaluarachi, Keerthi Gunawardena,Kokila Deekiriwewa, and Laksiri Peiris.
A 15 percent excise duty has been introduced on 5-20 tonnes lorries and 20 percent for more than 20 tonnes. The association said it would result in Mitsubishi, and Canter lorries going up in price by around Rs. 400,000 to Rs. 500,000.The duty on three wheelers has gone up by five percent as well.
VIAL said it was time for consumers to purchase vehicles immediately as there would be no significant changes until the next budget.
Some proposals submitted by VIAL, however, have been incorporated in the budget. Lorries below 3,500Kg would be registered as dual purpose vehicles. Also in the 2012 budget, dual purpose 2200 CC diesel and 1800 CC petrol cab registrations in the first year would be taxed at Rs. 40,000 under the semi luxury category. This tax would be removed from this year’s budget with affect from January next year on the request of VIAL, the association said.
Sri Lanka saw a glut of vehicle imports on lower taxes, loose monetary policy and an artificially strong exchange rate in 2010.
However, by mid 2011 the country began to show signs of entering into a balance of payments crisis.
Belated policy reversals were adopted in February this year, one of them being increasing duties on vehicle imports.