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Sri Lanka vehicle taxes up, electric car levy up 1000-pct

Nov 22, 2015 19:43 PM GMT+0530 | 0 Comment(s)

ECONOMYNEXT - Sri Lanka has raised vehicle import taxes with electric cars which were charged low taxes going up over 1000 percent as the new administration struggled with a balance of payments crisis after printing money to pay hiked salaries of a bloated public service.

A Nissan Leaf electric car which was taxed at a very low rate of 200,000 rupees, is now taxed at 2.35 million rupees, pushing up the potential retail price over 5.5 million rupees.

The tax on a Toyota Axio car which was about 2.2 million rupees has gone up to 2.62 million rupees.

Sri Lanka customs is charging vehicles excise taxes a formula based on engine sizes after the budget.

The public service has been expanded since 2005 with the support of the Janatha Vimukthi Peramuna (JVP) party which pressures each administration to hire tens of thousands of unemployable graduates as new tax spenders.

The current administration which tried to trim the public service in 2004 to reduce the burden of the state on the poor, was kicked out for its trouble and it returned to power promising a 10,000 rupee salary hike to state workers, strongly backed by the JVP.

The ordinary people are already paying for the salary hikes and other 'benefits' given in a revised budget in January 2015 which was strongly approved by the JVP, in the form of currency depreciation after the central bank started to print billions of rupees to bridge the deficit.

The rupee has fallen from 131 to 142 to the US dollar so far this year. Last Friday another 8.0 billion rupees were printed.

Raising car taxes is a standard response in Sri Lanka to balance of payments crisis generated by excessive state spending accommodated by the Central Bank in the form of printed money and artificially low interest rates.

The new administration ended a feudal style privilege where the elected ruling class and state workers were given tax free and tax slashed cars while the ordinary man on the street was around 200 percent or more. (Colombo/Nov22/2015)


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