Car/Vehicle Prices Spike
Vehicle imports before the most recent taxopolypse.
Taxes have spiked on car imports, like, a lot. Sri Lanka traditionally has high taxes on cars – up to 300%. After the war the taxes were dropped (briefly to near zero on hybrid cars) and people went on an orgy of vehicle buying. Now, however, it looks like the party is over. The price of a motorbike has gone up by Rs. 50,000, a Maruti costs Rs. 450,000 more and the price of a hybrid has gone up by almost 1 million.
This sucks, but the people who are really stuck are those who have paid a deposit to import a car and now suddenly have another million or so on the bill. I heard about this happening to someone importing a Porsche earlier and didn’t much care, but I suppose it affects people buying Marutis also. I talked to another friend whose father just had a bill go up by Rs. 3 million. I mean, people are simply getting screwed here.
| Vehicle | Old Price | New Price | Increase | Tax Increase (Percentage) |
| Motorbike | Rs. 165,000 | Rs. 215,000 | Rs. 50,000 | 51% |
| Three-Wheeler | Rs. 390,000 | Rs. 490,000 | Rs. 100,000 | 40% |
| Van | Rs. 4,300,000 | Rs. 4,700,000 | Rs. 400,000 | 41-114% |
| Maruti 800 (Petrol Car) | Rs. 1,100,000 | Rs. 1,550,000 | Rs. 450,000 | Rs. 85-129% |
| Hybrid Car | Rs. 3,700,000 | Rs. 4,700,000 | Rs. 1,000,000 | 14-57% |
As you can see, the prices were already high. Now it’s quickly getting back to prohibitive. The source here is the print edition of the Daily Mirror. I reproduce here because their ePaper is largely unusable and un-linkable.
Why
The government obviously has money problems, but it may not be as simple as directly raising money. I think they made more money when taxes were lowered simply because people imported so much. In this case I think they’re actually trying to depress demand, perhaps to decrease fuel imports. Fuel prices have also spiked, so there’s considerable pressure there already.
The thing is that vehicles and transport are one of the clearest correlates with growth. When you depress peoples ability to travel, you also depress the economy. Which is depressing. And, to add insult to injury, they’ve also increased taxes on cigarettes and alcohol. That said, my used car just went up in value. If you’re looking.
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I think we need to focus on getting the public transport system a bit more organized – solution is better trains and buses that are used by all classes (with of course variations within for price discrimination) . The growth correlation with individuals owning vehicles may be a bit endogenous here.
Last time i looked our country is in a mess called a “balance of of payment crisis”. Most likely this was aimed at cutting imports. And as i can remember our petrolatum imports alone costs billions of $. So yeah government would like to cut back on them.
But this (increasing vehicle tax) causes another problem. Due the increased prices, the tax revenue for the government will miss their targets which would result in missing budget targets (specially controlling the deficit).
Hence i think the tax on liqueur and tobacco.
The tax for hybrids seems wrong. The tax for them has gone up only 9%. that from 51% to 60% I can’t see that number amounting to 1mn, unless you are buying one of those toyota crown hybrids :)
http://www.treasury.gov.lk/depts/mofp/taxnews/vehicleTaxes20120402-en.pdf
The mirror is so bad with information
Journalists… ;)
[...] a degree more accidents will happen as we get more vehicles. Which has happened, current tax increases nonwithstanding. That degree is exacerbated, however, [...]
Sri Lanka’s vehicle pricing is ridiculous! A brand new Maruti 800 costs just INR 200k in India(About SLR 400k). The prices of standard Japanese cars in SL match the prices of luxury cars in other countries. I live in the Middle east and you can actually by a 2010 Camry for about LKR 1.5 mn, if not less, here. Our duty policy is a bloody nuisance!
What isn’t a bloody nuisance in this country? This country is broken- completely and utterly, we’ve been on the precipice of “failed state” for sometime now and we walk a very fine line but one of these days BOOM and it’ll be civil unrest all over again.
Ridiculous is right. I’m so glad we at least managed to replace our old specimen with a bit better secondhand car a short while back. Wish we’d been able to afford a brand new one though.
[...] Compiled by Gossip Lanka. Gossip Lanka has published a list of actual vehicle prices after the recent price hike. It’s both enlightening and terrifying, as embedded above. What really grates, however, is [...]