Vehicle importers upset by Budget

Friday, 8 March 2019 00:16 - - {{hitsCtrl.values.hits}}

The Vehicle Importers Association of Sri Lanka (VIASL) yesterday voiced its concern about the increase in taxes imposed by the Budget and warned it would be detrimental to the industry.

Ranjan Peiris - Pic by Upul Abayasekara

The Association said it was dismayed that the customs duty increase in petrol and hybrid vehicle categories have resulted in vehicle prices increasing sharply. Due to the increase in the production tax and tax on luxury vehicles, the prices of several popular brands and models have been increased with effect from Wednesday.

Accordingly, the following vehicles have increased in price: Suzuki Alto by Rs.150,000, Daihatsu Mira Rs. 150,000, Suzuki Jimny Rs. 150,000, Suzuki Wagon R Rs. 250,000, Suzuki Spacia Rs. 250,000, Toyota Vitz Rs. 250,000, Suzuki Swift Rs. 250,000, Honda Civic Rs. 250,000, Audi A1 Rs. 250,000, Suzuki Grand Vitara Rs. 250,000, Toyota Axio Hybrid Rs. 525,000, Honda Vezel Rs. 525,000, Toyota CH-R Rs. 540,000, Toyota Premio Rs. 675,000, Toyota Allion Rs. 675,000 and Honda CRV Rs. 675,000.

Commenting on the price impact, VIASL President Ranjan Peiris said: “We are extremely concerned by the Government’s new taxes resulting in price increases on the most popular vehicles. As prices shoot-up, it becomes unattractive for the general public to purchase vehicles, resulting in a possible slump in the industry.”

The Association also notes with alarm the ‘Luxury Tax’ imposed on motor vehicles as per the Budget 2019. The Association points out that according to the budget, taxes will be imposed on the CIF value of the manufacturer’s price. Thereby taxes are to be added to the original price when the tax-free threshold is exceeded.

For example, vehicles over Rs. 3.5 million will be subjected to an additional ‘Luxury tax’ which is also an ‘import tax’ creating an unprecedented increase in the prices, dramatically affecting industry players.

“While we understand the rationale in bring about the luxury tax, we appeal to the Government to create a more reasonable tabulation preventing any detrimental effects on the industry”, noted Peiris.

VIASL notes that while the production tax on mini ‘buddy’ trucks with a cargo capacity of less than 2,000 kilos have been reduced by Rs. 100,000, this reduction given the current prices and exchange rates is insufficient to create any significant impact and encourage more buyers in this category.

Given the current Budgetary measures, VIASL appeals to the authorities to re-evaluate the current loan-to-value (LTV) ratio used. With the present LTV at 50%, this funding is required by prospective buyers to make a vehicle purchase. VIASL proposes that this ratio is increased to 75%, given the current economic environment, thus enabling a wider general public to be able to afford the purchase of a motor vehicle.