Sri Lanka slaps US$24,000 tax on grandmother’s 10-year old clunker: report

ECONOMYNEXT – Sri Lanka’s practice of charging import taxes on cars at arbitrary values has taken a new twist with a 24,000 dollar tax slapped on a 10-year old car, belonging to a grandmother who had returned to the country after years of living abroad, a media report said.

Sri Lanka’s The Island newspaper said Savithri Melder, who was resident in Australia and returned to Sri Lanka with her 85-year old husband and got special permission to import their old family car which they had used for 10-year.

She was very attached to the car and could not bear to leave behind.

"It was like deserting your old grandmother", the newspaper quoted Melder as saying. "We simply couldn’t exist without our trustworthy Toyota car, which has silently served the family over the years".

However Sri Lanka’s customs had slapped a 3.5 million rupee tax on the car (24,450 dollars at currency exchange rates) which was the tax charged on a new car.

Sri Lanka charges taxes on old cars at inflated prices based on a ‘factory price’ and does not allow reasonable depreciation for old vehicles and taxes them the same as a new car.

There are six main ways that imported goods can be valued for tax purposes according to WTO customs valuation conventions.

Sri Lanka’s case of a grandmother being charged 24,450 dollars for a 10-year old Toyota may be epic case in WTO history, analysts say.

In a free countries, where the state and rulers have been sufficiently restrained to prevent arbitrary rule and people are treated justly, depreciation is allowed for old imported cars.

Sri Lanka is charging large ‘cesses’ effectively putting most of the taxes beyong WTO rules, analysts familiar with the issue said. Sri Lanka’s motor car importers have called for valuation to be done on a more reasonable basis.

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In Sri Lanka vehicle taxation is also a symbol of unjust rule and priviledge where the elected ruling class pay no tax and state workers, who are collecting tax are also getting tax slashed cars. Attempts to end the injustice and re-create an equal society in this year’s budget was scuttled by legislators who demanded that they get the tax free cars. State worker unions then followed suit.

Sri Lanka charges very high ‘cesses’ and value based import taxes on cars running up to 200 percent which encourage importers to ‘undervalue’ them, breaking laws.

To counter such activities the State has refused to recognize depreciation of all vehicles not only of the guilty but also of the innocent.

Sri Lanka’s just rule of law has deteriorated since the 1970s with the guilty getting away scot free add collective punishment being inflicted on the innocent through tighter regulations not only in respect to cars, but in other areas, freedom advocates say.

Calls for greater punishment or ‘dedi danduwam’ is common in society. (Colombo/Dec24/2015)

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