Travel industry calls on Govt. and CBSL to reconsider high import taxes on vehicles

• Caution that only handful of businesses capable of absorbing costs will dominate industry, leading to inflated travel prices and overall decline in service standards
• Insist modernising transportation sector crucial for ensuring tourist safety and comfort as risks are not just economic, but reputational as well
• Criticise Govt.’s economic advisors lack practical experience in tourism sector

Travel industry has urged the Government and the Central Bank to reconsider the high import taxes on vehicles, citing that excessive levies are crippling tourism businesses and threatening the country’s ability to attract high-value visitors.  The industry stakeholders have written to President Anura Kumara Dissanayake pointing out that the country’s tourism industry is at risk of stagnation unless, urgent reforms are made to modernise its transport sector.

 “Although the Government under IMF guidance has allowed buses, vans, vans, cabs and certain types of vehicles to be brought tin, private sector cars remained excluded, and the exorbitant taxes on permitted vehicles make it financially unfeasible for many operators,” sources told the Daily FT.

They cautioned that if these restrictions continue, only a handful of businesses capable of absorbing the costs will dominate the industry, leading to inflated travel prices and overall decline in service standards.

Noting that the risks are not just economic, but reputational, he pointed to the series of road accidents involving tourists have led to fatalities and injuries, raising concerns over the country’s deteriorating transport infrastructure. 

They said if left unaddressed, insurance companies could impose additional charges on tourists, further dampening the country’s appeal as a destination. “Such incidents tarnish the country’s image and may lead insurance companies to impose additional charges on travellers visiting Sri Lanka,” they added. 

They drew parallels with Malaysia’s strategic approach to tourism under former Malaysian Prime Minister Mahathir Mohamad, while serving as Minister of Trade and Industry, who prioritised a strong first impression by modernising transport networks and urban aesthetics to attract foreign visitors.

“Therefore, modernising our transportation sector is crucial for ensuring tourist safety and comfort. If the Government does not address this issue, only a few businesses capable of affording high import taxes will benefit, ultimately leading to increased travel costs and negatively impacting the wider tourism industry. An upgraded transport system would enhance the overall travel experience and encourage visitors to recommend Sri Lanka as a destination,” they opined. 

Their critique extended beyond taxation policies and argued that the Government’s economic advisors lack practical experience in the tourism sector. “The Government’s current economic advisers may not fully understand that lower import taxes on vehicles for tourism businesses would not only boost government revenue in the long run but also attract more foreign currency into the country,” he said.

He asserted that by prioritising improved transport services, Sri Lanka can achieve its ambitious target of generating over $ 8 billion from tourism by 2030.

Drawing his extensive international travel experience since 1986, they pointed to the rapid progress of Thailand, Malaysia and Singapore, which have continuously enhanced their tourism standards, ensuring a seamless experience from the moment visitors arrive at the airport to their departure.

“These countries have also modernised their transportation services to provide safe and luxurious travel for tourists. For instance, even after the COVID-19 pandemic, Thailand introduced several measures to boost tourism, including offering ‘On-Arrival Visas’ to many countries, including Sri Lanka. However, for over 40 years, Sri Lankans have been required to apply for a visa through the Thai Embassy before travelling,” they claimed.

They reiterated the Government to recognise that lowering import taxes on travel vehicles would not only improve tourist experiences and safety, but also drive a long-term revenue growth by attracting greater foreign currency inflow. 

“If Sri Lanka is serious about positioning itself as a premier travel destination, it must ensure that visitors can move swiftly, safely and comfortably from the moment they arrive till departure,” stakeholders said.