Sri Lanka ‘carbon tax’ burden to fall on poorer, older citizens; EVs exempt

ECONOMYNEXT – Sri Lanka has proposed higher carbon taxes for older cars, generally owned by less affluent people and older citizens, while lower taxes are proposed for newer cars which are usually owned by richer people in a classic socialist-interventionist move.

The Finance Ministry has proposed taxes of 0.50 cents per cubic centimeter for vehicles less than 5 years old, 1.00 rupee per cc for cars between 5 to 10 years old and 1.00 rupee for cars over 10 years. Hybrid vehicles will be charge half the tax.

In another classic socialist-interventionist move no distinction is made between petrol and diesel cars, though diesel has much more carbon, compared to petrol which has more hydrogen.

Older cars owned by pensioners and older people are usually used only for weekend marketing, while newer cars, especially hybrids owned by rich people travel more and burn more fuel.

Politicians also own new cars imported tax free every few years, and will quality for the lower tax.

In another classic, electric vehicles will be exempt from the carbon tax altogether, though in 2017, 52 percent of electricity was developed by coal which is 100 percent carbon and fuel oil.

Sri Lanka has reduced tariffs for late night/early morning power, where a higher proportion of power is developed from coal to help charge EVs.

The current administration came to power promising to reduce the total number of taxes and encourage compliance by broadening the base and reducing rates, but has broken the promise. Health services has also been charged value added tax, which almost no free country does.

If Sri Lanka wasnts sensible ‘carbon’ taxation, it should tax diesel and petrol at least equally so that retail diesel prices move above petrol analysts say. Due to higher carbon content in diesel the fuel has a higher calorific vlaue and is priced higher than petrol in free countries and is also more expensvie to import. (Colombo/Aug16/2018)





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