ECONOMYNEXT – Sri Lanka’s Parliament’s Committee on Public Finance has approved an increase in taxes for electric vehicles, Chairman Harsha de Silva said.
“The rationale for the increase was that the gap between petrol and diesel cars and electric vehicles was too wide,” de Silva told parliament.
“Their idea is that the electric vehicle tax will still be lower than that for petrol and diesel, but it should be higher than the earlier level.”
De Silva did not say whether the tax change was already in effect and the committee was clearing it in a shoot-first-ask questions-later move or it is new tax coming in the future.
Deputy Minister of Finance and Planning Harshana Suriyapperuma said later in the day that parliament approval was sought for an excise tax gazette number 2421/42 originally issued on January 31, 2025.
In Sri Lanka cars are heavily taxed for revenue purposes in the style of an income tax on the people.
Concerns have been raised that the part of the tax paid by the citizens for cars are now being channeled to domestic assemblers who are not liable for 20 percent import duty.
Cars are subject to a plethora taxes including excise and value added tax, being a lucrative source of revenue for the state.
The loss of taxes by domestic assembly is not yet known. Sri Lanka used to give ‘permits’ allowing politicians and state workers to evade taxes, causing public discontent. (Colombo/May20/2025 – Updated with comments from Deputy Minister of Finance and Planning)