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* Sri Lanka raises taxes on Motor vehicles, cigarette, and Liquor
Sat, Mar 31, 2012, 01:04 pm SL Time, ColomboPage News Desk, Sri Lanka.

Mar 31, Colombo: The Sri Lankan government has decided to raise the taxes levied on motor vehicles, cigarette, and Liquor with effective from today.

Sri Lanka's Ministry of Finance and Planning in a press release said that the government has decided to revise the customs Duty, Excise (Special Provision) and Excise Duty on motor vehicles, cigarette, and Liquor with effective from March 31, 2012.

However, there is no change in the levies imposed on tractors, buses and trucks.

The Ministry said in its statement that 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%.

In 2011, Sri Lanka has imported 54, 285 cars up by 46% from the 37,134 imported in 2010.

Justifying the increase in levies, the Finance ministry said since 2009, the vehicle imports have been

rising rapidly and with that the demand for fuel and expenses for fuel imports have also been rising.

The measure is expected to curtail the expenses the government incurring in importing fuel and reduce traffic congestion as well.

With the revisions that will be effective from today, the hybrid cars are slapped with a new production tax from 14 - 57% and a total tax of 65 - 125% while for regular petrol cars the final tax will range from 200 - 275% depending on the engine capacity.

The taxes for diesel cars have been raised from current 180% to 250% for a car under 1600cc and from a current 291% to 350% for a car over 2500 cc.

Taxes on petrol-driven vans have been raised from the current 103 - 172% to 125 - 200% depending on the number of passengers.

Taxes on diesel vans have been increased from a range of 112 - 291% to 125 - 350%.

Petrol and Diesel driven three wheelers are slapped with a 100% tax from the current 51% and 61% respectively while the tax on electric three wheelers has been increased from 27% to 50%.

Motorcycles have been slapped with a tax increase from the current 61% to 100%.

The government has also revised the taxes on imported liquors and cigarettes.

According to the revision, tax for a liter of imported beer has been increased by 50 rupees and for local beer by 5 rupees. Taxes for hard liquor have been increased by 60 rupees for a liter.

The price of a every kind of cigarette has been increased by one rupee.

The revised taxes on the alcohol and cigarettes are expected to bring in an income of 3 billion rupees to the government, the Ministry noted.

Following Sri Lanka's move to reduce vehicle import taxes by 50 percent in June 2010, vehicle imports to the country rose sharply contributing to the ballooned trade deficit of US$ 9.74 billion in 2011.

Sri Lanka's Central Bank implemented several policy measures in February to bring the import expenditure down while the government increased the fuel prices significantly as a measure to reduce the trade gap.

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