Government urged to ban used car imports,

Franchise motor traders are to request the Treasury to completely ban reconditioned vehicle imports and reduce import duty on hybrid and small cars if it wants to increase customs duty revenue as more people will start buying such new vehicles.

Treasury Secretary Dr. P.B. Jayasundera has stressed the need to stop a revenue leakage due to reconditioned vehicle imports by unscrupulous importers through under invoicing and de–registering of vehicles in countries of origin. He highlighted this ‘underhand’ tactic at several post budget forums and TV interviews, new motor vehicle traders told the Business Times.

The country has lost 25 per cent of vehicle import duty revenue due to under-invoicing, they said, quoting the Treasury Secretary.

Therefore what the government should do is to complete ban used car imports to Sri Lanka providing some relief for importers to import brand new hybrid and small cars at affordable prices for people eagerly waiting to buy a car for their transportation, one leading dealer, who wished to remain anonymous, said.

Used car dealers have very few employees and most of them are not even paying EPF and ETF for them, he said, adding that these dealers have become a mafia capable of hiring gangsters to harm anyone.

Duties, taxes and surcharges on imported automobiles add between 150 to 500 per cent to the cost. Import duty and taxes on a midsized family car, is around 300 per cent of the cost, insurance and freight (CIF value).

“We need to sell at least 100 luxury vehicles to break even,” another new car trader said.

“What is important is to create a level playing field in the industry,” he added.

Indian companies such as Tata Motors, Mahindra & Mahindra, TVS Motor Company, Hero Motocorp, Bajaj Auto and Maruti Suzuki, for whom Sri Lanka is a key export destination, are experiencing a significant slowdown in demand following the import duty hikes, which have made their vehicles very expensive in the island nation.

Tata Nano, for instance, has nearly doubled its price since its launch.

The government should slash duty on such vehicles to make middle income earners owners of brand new vehicles, he added.