Apr 10, Colombo: Dismissing media reports Sri Lanka Treasury says it has not been flooded with applications from government officials who are eligible to receive imported duty free vehicles following the tax hike on imports.
The Treasury said that some misleading media reports have been published saying that the Treasury has flooded with applications submitted by government servants to obtain the duty free vehicle permits after the recent duty revisions but it has received only about 100 applications.
"We have received only about 100 applications from the eligible government officers for import of vehicles on duty concessions after the recent excise duty revisions," Hiransa Kaluthanthri, Director Department of Trade Tariff and Investment Policy in the Treasury has said.
She has added that the applications might have even been forwarded by them before the revision at least two weeks ago as the applications are channeled through the respective line ministries.
The Treasury says due to rapid increase of motor vehicle imports, the government aims to keep the imports at a manageable level by increasing excise duty on vehicle imports from March 31st.
The measure is expected to help reduce the demand pressure on the foreign exchange and future excessive demand in petroleum imports.
Sri Lanka's annual imports of motor vehicles rapidly increased after government slashed the duty on vehicle imports by 50% in June 2010 contributing to the ballooned trade deficit of US$ 9.74 billion in 2011.
According to the Ministry of Finance and Planning, all vehicle imports, including cars, motorcycles and three wheelers, to the country rose 147% in 2011 compared to 2010 and from 2009 to 2010 the increase was 121%.
With increasing number of motor vehicles the country had to import fuel and fuel import expenditure went up by 19% percent in January this year, in comparison to 2011 January.
The government expects a considerable drop in vehicle imports following the tax increase which ranges from a lowest of 40 percent to a highest of 290 percent.
Currently the highest ceiling is around 401 percent and this is also very much below the highest rate of 524 percent which was maintained prior to the revisions made in 2010, the Treasury points out.