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Sri Lanka hikes carbon tax 80-pct; fears of trouble ahead for motorists

ECONOMYNEXT – Sri Lanka is raising a carbon emission tax for cars by 80 percent to 2,000 rupees a media report said, while the fees will be collected not at the point of testing but by a state agencies.

The taxes are being raised after so-called ‘economists’ called upon the rulers to increase the
‘tax-to-GDP’ ration instead of cutting their spending.

At the moment the carbon emission tax is directly paid to private firms that carries out the test, incentivising them to improve customer service and set up more testing locations and giving market power to the customer.

However under a proposal for a budget for 2017, the government will collect the tax and the private firms will carry out the test ‘free of charge’.

There are fears that it will result in members of the public being treated badly like at government offices, which supposedly gives ‘free’ services, but the cost is recovered from taxes on foods and other items.

There was no prior warning or public discussion, or any evidence based policy making to decide whether the proposal would harm of help the public.

The budget for 2017, boosted tax revenues to finance higher state salaries and subsidies, which can help the poor by reducing the need to print money, but also it had a series of interventions including on the banking system that could harm the public, analysts warn. (Colombo/Nov14/2016)

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