TAX ON HYBRID VEHICLES
Posted on February 6th, 2015

 Dr. Tilak S. Fernando

The Editor

TAX ON HYBRID VEHICLES

 Although the new Minister of Finance Ravi Karunanayake, in his first 100-day revolutionary interim budget for 2015, managed to offer a significant relief to consumers by reducing the prices of thirteen items, yet he seems to have overlooked a vital area when it comes to pollution and environmental factor.

Reducing the price of petrol per litre at the pump by a record level, which no previous government had done, needs to be appreciated and commended, but simultaneously increasing the import vehicle duty by twenty percent on hybrid vehicles has made many ‘would be’ owners of family sized hybrid cars worried and to think twice.

All hybrid vehicles do not come under the luxury bracket, but today most of the motorists in Sri Lanka seem to use economical types of hybrid cars  (such as Toyota Acqua) .

The most common type of hybrid vehicle comes with a combined internal combustion engine and an electric motor resulting in fewer emissions being generated. This is the very reason why the modern vehicle manufactures have increased their hybrid vehicle productions to meet with the ever-increasing international demand, concentrating mainly on the economy and the environmental pollution factor.

.In such a back drop it is rather disheartening to note that Sri Lanka has decided to ignore such international acceptable norms and decided to punish the ‘would be hybrid buyers’ in the future by increasing the import tax on new hybrid vehicles. On the other hand, this drastic action will increase the environmental pollution further with the importation of new combustion engine cars up to 1400 cc and tut-tuts (three wheelers) as a direct result of the latest slashed car import duties introduced in the interim budget

If the Finance Minister’s intention was to ‘pinch’ the super rich by imposing heavy taxes on hybrid vehicles and pass its benefits on to the ‘ poor’, then surely he could have thought of imposing import duty on hybrid vehicles of luxury type such as Mercedes Benz, BMWs, Audis et cetera rather than hitting below the belt of the average motorist whose main ambition would be to go in for a hybrid vehicle of lower price range (such as Toyota Acqua) for economical reasons. This would have helped so many average motorists with an added benefit to the environment.

With the increased trend in sales on hybrid vehicles in Sri Lanka lately, it is apparent that many car dealers with large stock piles of internal combustion engine vehicles are suffering due to lack of sales. In such circumstances, critics may point a finger at the Finance Minister (who is also a well known businessman with good friends in the motor car industry) whether the increase in import tax on hybrid vehicle imports were done indiscriminately, simply as a sympathetic act to ‘bail out his business colleagues’!

There is still time within this one hundred days, they say, for the Finance Minister to put this mistake right in the same manner he very quickly thought about amending the Mansion tax which was proposed in the budget which apparently was going to affect his own palatial house at Jayewardenepura!

Dr. Tilak S. Fernando

[email protected]

2nd February 2015

 

2 Responses to “TAX ON HYBRID VEHICLES”

  1. AnuD Says:

    Hybrid vehicles are just a wastage of money.

    Tax breaks are just for a useless purpose.

  2. Independent Says:

    Tilak,
    I believe the government earns more profit from selling oil but loose money on electricity ( depending on ability to generate Hydropower).

    But I remember TOP GEAR people proved that Hybrids when driven certain way drinks more petrol than BMW’s.

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