Budget may result in price drop of small cars and electric vehicles
The first Budget that Finance Minister Mangala Samaraweera will present in November is expected to decrease the exorbitant taxes presently being imposed on small cars and offer better enticements for electric vehicles in line with his pledge of introducing a “leaner, greener” Budget.
In 2016 the former Finance Minister, Ravi Karunanayake acting on the misguided assumption that Sri Lanka’s balance of payments predicament was attributed to increased imports as opposed to the real cause which was excess money being printed by the country’s Central Bank, had drastically hiked taxes on all vehicle imports.
An IMF financial bailout coupled with positive fiscal strategies has managed to reduce the depletion of Sri Lanka’s foreign reserves which in turn has prompted the GoSL to contemplate introducing a more rational vehicle taxation plan.
It was observed that when the new government assumed power at the beginning of 2015 there was a significant rise in government income as a result of the immediate reduction of vehicle import taxes during a period when imports were commencing to accelerate.
In addition the salary increment given to government employees also contributed to more vehicle leases being taken out with car registration number increasing to a record 105,628 in 2015, but dramatically declined to 45,172 in 2016 due to the increased vehicle taxation.
From January-August 2017 car registrations numbered a mere 23,000 highlighting the income loss to the government.
If as proposed by the 2018 Budget, the prices of small cars and electric vehicles were to reduce it would create a demand for such vehicles which in turn will provide business opportunities to suppliers.
|Article Code :||VBS/AT/26092017/Z_11|