The new tariffs on car imports in Sri Lanka are aimed at discouraging imports of big cars to ease traffic congestion while ensuring revenue for the government, Finance Minister Ravi Karunanayake has said.
The Finance Ministry has last week announced an import tax revision for cars with dealers claiming that the new tariff makes import of certain car types very difficult.
While the duties on cars below 1300 cc have been reduced, the duty applicable on cars over 1,500 cc goes up by more than double.
Karunanayake said the new tax revision was due to two reasons; car taxes were aimed at discouraging imports “until the road network improved”.
“Today, if you get your vehicle on the road, you spend hours stuck in traffic. Until we improve the road network, we need to discourage any further imports.
“The second issue is the number of vehicles that has flooded our roads last year. About 90,100 cars were imported last year compared to 45,000 in 2014. We need to reduce imports and ensure revenue at the same time,” he said.
The minister also listed 15 types of cars as having benefited from the new tax revision, qualifying for lower duty rates.
He said in the previous system of evaluating a car for customs duty there were loopholes as the importers used to under value the vehicles.
So there was a lot of revenue denied to the state.
He said the new tariffs were imposed based on the proposals from the car importers.