The Finance ministry has revised the tax rates on vehicles making smaller cars and three wheelers more expensive while lowering the price of electric cars which are already heavily subsidised.
Finance minister Ravi Karunanayake reduced the tax on electric cars (less than 99 kilo watt) to a tax rate of 40 per cent, down from 50 per cent of CIF (cost, insurance and freight) earlier.
However, the unit rate of gasoline-powered cars with an engine capacity of less than 1,000 cc was increased from LKR 1,500 for every cubic centimetre to LKR 1,750, an increase of LKR 250 for every CC.
Dealer said low-end Indian-made cars could go up by as much as LKR 200,000. However, car dealers had lowered their retail prices by up to LKR 200,000 just before the budget anticipating a tariff reduction.
This means the price of smaller cars will remain the same, but the state will mop up the reduction in the retail price announced by dealers last week.
The tax on three wheelers will go up by about LKR 50,000 across the board for gasoline, diesel and LPG powered models.
The government wants to replace the highly polluting three wheelers with electric three-wheelers or smaller cars. Tax on electric three wheelers will be 50 per cent or at the rate of LKR 10,000 for every kilo-watt of the motor.
There is no change in the duty structure of medium range cars (1,000 cc to 1,800 CC) both gasoline and diesel as well as hybrid.
There is a slight reduction in the unit rate of gasoline cars exceeding 3,000 CC and diesel cars with an engine capacity of over 2,500 CC and hybrid cars of over 3,000 CC.
There was no change in the tariffs on smaller motorcycles while a unit rate based on the engine capacity was introduced to make bigger bikes more expensive (COLOMBO, Nov 11, 2016)