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ECONOMYNEXT – Sri Lanka has lost 14.3 billion rupees in taxes from car permits given to public servants, including doctors, military officers, central bankers, finance ministry and tax officials, in 2019 and 2020 information disclosed by the finance ministry shows.
Inclusive of some 2021 tax losses when imports were banned for the rest of the year, 14.4 billion rupees of foregone revenue from a waived luxury tax is shown.
The list only shows waivers of a so-called ‘luxury tax’ imposed on larger vehicles above a certain value and size.
The list does not show other vehicles imported under car permits such as double cabs or cars below a certain size.
The list also does not seem to include tax free cars imported by politicians.
In 2019, Sri Lanka has lost 8.3 billion rupees from the luxury tax on car permits and in 2019 the loss 5.92 billion rupees.
In 2021 when car imports were stopped as the central bank started printing money to cut rates and target ‘potential output’ only 85.6 million rupees were lost.
Among the biggest tax waivers of over 10 million rupees went to some doctors and military officers. Doctors were among the biggest users of tax slashed car permits in the list.
Sri Lanka at one time did not allow cars imported by state workers to be transferred for many years.
But reportedly after Customs raided a finance company involving a fleet of vehicles, the rule was relaxed by the then President.
Among the largest tax waivers listed were given to Rolls Royce and Maclaren assigned to Melwire Rolling (Pvt) Ltd.
The 45.6 million rupee Rolls Royce was given a 42.1 million rupee tax waiver.
The 41.46 million McLaren was given a 37.9 million tax waiver.
There were also a large number of Audi A5 and Q2 vehicles listed at prices over 80 million rupee. It is not clear whether the disclosure is an error. The market value of the A5 and Q2 are much lower.
Up to end 2023, 138 cars imported under a migrant worker remittance scheme was listed to lose 436 million rupees in luxury taxes.
The total for the three years was listed at 14.86 billion rupees, involving 2,034 cars in 2019 and 1,470 cars in 2020.
It is not known how much the total tax losses or total vehicle imported through ‘car permits’ is. (Colombo/June20/2024)
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