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Sri Lanka earns Rs85bn from vehicle taxes up to May

ECONOMYNEXT – Sri Lanka has earned 85.3 billion rupees as only excise taxes from imported motor vehicles in the five months to May 2015, up from 32.7 billion rupees a year earlier, which was lower than capital spending on roads and bridges during the same period.

Vehicles also pay an annual road tax, a luxury tax, a vehicle registration fee, and taxes are also charged on the fuel used by vehicles, especially petrol.

Sri Lanka is now seeing sharply higher imports of cars mainly driven by credit helod by low interest rates helped by central bank liquidity releases, which has prevented rates from moving up.

Due to bad government policy, taxes on diesel, which are used by heavier vehicles which contribute more to road wear and tear is lower.

Excise taxes on fuel alone was 2.4 billion rupees during the period, not counting import duties and other levies. Lubricants are also taxed.

Capital expenditure on road and bridges was only 62.1 billion rupees during the period.

Though large volumes of taxes are collected from vehicles, Sri Lanka has a bloated tax-spending public service which eats up most of the revenues as well as subsidies that helps the elected ruling class buy votes.

In the first months of the year, out of the 457 billion rupees in taxes collected from the people, 289 billion rupees or 63 cents out of every tax rupee went to pay salaries and pensions of state workers.

The current administration ratcheted up state worker salaries by 10,000 rupees a month.

The elected rulers also get tax free cars, and state workers tax-slashed cars, in a tax privilege of the likes seen in medieval feudal societies where ordinary people were treated as serfs by the ruling class.





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