Sri Lanka’s haves, have nots and have yachts
ECONOMYNEXT – Sri Lanka’s latest budget has scrapped unfair privileges accorded to elite state employees that widened the gap between the haves and the have nots.
Finance minister Ravi Karunanayake in unveiling his first full budget proposed that Sri Lanka becomes a nation of haves and have yachts. He removed the super luxury taxes on yachts, caravans and any outdoor camping gear.
He wants to encourage yacht ownership in a country that is building two marinas — Port City Colombo and Galle — and trying to leverage the end of the war to boost tourism.
He plugged a LKR 40 billion tax leak through duty concessionary permits given to state sector employees and elected representatives to import vehicles. Under that system, commoners had to pay through their nose even for a modest set of wheels.
However, all that will come to an end. With taxes taken off caravans, Sri Lankan families unable to pay for a mid-size Japanese-made car because of the 250 percent tax can now ride comfortably in a tax-free caravan.
Given the huge traffic congestion and considering that an average family could be spending more time in traffic than at home, can now combine the two and live on the road.
Instead of large Sports Utility Vehicles, imported mostly on duty free permits of MPs and senior public servants, we could see duty free motor homes or RVs (Recreation Vehicles) hogging roads.
The LKR 5,000 charge on emission test could be suffocating for many vehicle owners, particularly motor cyclists and three wheelers, but more shocks are on the way when increased road taxes are announced later.
Private sector employee will no doubt be cheering Karunanayake for taking them off PAYE (Pay As You earn) which was deducted at the source depriving employees the ability to file creative tax returns.
Employees earning less than LKR 200,000 a month are no longer liable to pay taxes and ditto for the self-employed.
(COLOMBO Nov 21, 2015)