The recently announced duty reductions on motor vehicles, particularly passenger cars, was a timely and correct move by the government though in certain quarters it is being mis-interpreted as a concession to the richer classes more than the average man. They cite that while the import duty on luxury vehicles have been drastically reduced running into millions incertain instances, the reductions affecting the common man’s modes, of conveyance like motor cycles and three wheelers are marginal and minimal.

Motor cycles and three wheelers as well as, commercial and agricultural vehicles like lorries and tractors which were considered - necessary for economic activity, were already enjoying concessionary duty rates and there was nothing much to reduce in the import duty on those vehicles. Still under the proposed duty regime even the prices of those vehicles too, are likely to come down by around twenty five per cent (25%) as reported. On the contrary the passenger cars and luxury vehicles were subject to a punitive rate of duty ranging from 300% in the case of petrol care and exceeding, 500% for diesel driven cars with the result that the price of a brand new family car was prohibitive and beyond the reach of even a middle class family except for those lucky persons like politicians and certain categories of public servants who were entitled to import duty free motor cars. Sri Lanka must have been the only country in this part of the world that imposed such a high rate of customs duty on motor vehicles. It may have been justified during the war but not any more.

Thus with no replacements taking place the fleet of passenger cars in the country was fast becoming antiquated and unroadworthy and their maintenance a costly affair for the owners under the prevailing exhorbitant prices of spares and accessories. The motor trade was in the doldrums and most traders would have been forced to give up their dealerships or franchises soon the absence of sufficient business. The writer is aware of some sales personnel who lost their employment due to drop in sales specially in the case of new makes introduced recently. The duty reductions made by the government are therefore timely and would definitely help to revive a sagging car market contributing to economic progress and employment. The reduced prices of new cars would also reflect in the second-hand car market.

The reduction of the import duties on motor cars should not be considered a concession to the rich. What the government has actually done is to rationalise an exhorbitant duty rate applicable to motor cars so that anybody who wishes to acquire a brand new motor car can now do so without having to pay through his nose or a ‘duty free’ permit purchased in the black market. The new prices of -motor cars should now come close to duty free prices, the doctors and other senior public servants pay when purchasing cars under the ‘duty free’ permit scheme, making the said permit scheme redundant.
 

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