Sri Lanka halts tax free vehicles for ruling class to protect rupee

ECONOMYNEXT – Sri Lanka has stopped the imports of tax free cars for members of the elected ruling class and state workers for one year to halt the slide of the rupee, which has a notoriously unstable soft-peg to the US dollar.

"Issuing of Vehicle permits to Members of Parliament will be suspended for a period of one year," the finance ministry said.

"Importation of vehicles for Government Ministries, Departments, Statutory Boards, State own Enterprises will be suspended until further notice.

"Importation of vehicle using the concessionary permits issued to entitled State Sector employees will be suspended for six months.

"No Letters of Credits will be permitted to be opened based on these permits during this period"

Sri Lanka has a neo-feudal style privilege where legislators and state workers have given themselves tax free and tax slashed cars, while taxing ordinary citizens on the street as much at 200 percent.

As part of other measures to reduce imports, a 200 percent deposit is now required to import vehicles other than, trucks, buses and ambulances.

The control is likely to hit state revenues further as cars attract high duty, while other imports are taxed at a lower rate.

Sri Lanka’s rupee initially came under pressure from unsterilized excess liquidity in the banking system in July and August, but over the last two weeks large cash shorts have developed from interventions.

The interventions have been sterilized by printing about 118 billion rupees into the banking system by last Friday.

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Economists and analysts have called for the central bank to be abolished in favour of a currency board to prevent political and economic instability and people can become prosperous in peace. (Colombo/Sept29/2018)
 

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