Dear Sir,
First of all, let us thank you for taking immediate action for our previous request and directing the Dept of TTIP to issue clarifications for the TTIP Circular 01/2010. However Sir, we have to trouble you again by requesting to reduce the aggregated tax percentage at least to the amount given in previous permits (ie. 25% ~ 40%) as many government officials cannot afford to buy a decent vehicle in the present aggregated rate of 50% ~ 70% which is almost twice as much than the previous permits. (If we remember correctly, the general tax rate back then were in between 140% ~ 400%, which has currently been reduced to 94% ~ 270% approx. Hence what Govt. executives expected was a further reduction NOT an 100% increase for what they already enjoyed)
Sir, as you very well know, most of the Sri Lankans use a car as their family vehicle rather than only for individual use. Hence, the permit should essentially provide a chance for these government executives to buy a decent family vehicle (at least a basic Sedan – such as Yaris, Corolla, Sunny, Tida if not an MPV or SUV- which caters their needs while letting them maintain their status as an executive) rather than a compact hatchback (Eg: Maruti 800, Alto etc). (I think it is needless to mention about the vehicles used by even the junior executives of the private sector)
Within the last few weeks we checked with most of the automobile agents in Sri Lanka about the prices. Even, while blaming the Ministry of Finance for not giving them proper instructions, (which may be the reason we cannot see a single advertisement in the media though the circular has been issued 2 months ago) they told that the prices will surely have a difference of over Rs. 1mn than last time. After checking with two government financial institutions we found that, for a loan of Rs.1mn the monthly installment would at least amount upto Rs. 25,000 which is same as the starting basic salary of a govt. executive. (Here, we are concentrating about the members of All Island Services, NOT the Semi Govt officials in Authorities, Corporations and institutes like CBSL, where they enjoy a salary of at least twice as much with additional allowances and were not given this privilege previously)
Sir, please go through the following link which publishes the grievances of one of our fellow All Island Service, the government medical officers of Sri Lanka. You would understand that even the members of an All Island Service which enjoys other allowances in addition to their salary and also has the permission to earn extra with private practices too cannot afford to buy a decent vehicle from this permit. If they too cannot afford to buy a decent vehicle from this permit how can most of the members of other all island services who just survive only with their salary afford to buy a good vehicle? GMOA TODAY - http://gmoatoday.blogspot.com/2010_12_01_archive.html
And is it fair to charge a tax less than of a Maruti for Limousines which can only be afforded by multi millionaires while charging the Govt. Executives who got a mere 5% increase in their salary more? (We are not against importing Limousines as it is an essential item in attracting high spending tourists, but only questioning the taxation policy wrt importing these Chevrolet 300 and Toyota Prado limousines with petrol guzzling 3500cc and 4000cc engines)
Sir, many Sri Lankans prefer to buy Japanese vehicles because of reliability and due to the appreciation of the Japanese Yen, (within the past few months the Yen has appreciated by 15% and it is predicted that it will reach 1USD = 70 ~ 75 Yen within the next few months) these Govt. Executives have to bare an additional burden of another 15% due to the currency appreciation (which widens the gap with the previous permit massively). As Sri Lankan Govt. reduced the taxes on vehicle importations by 50% a few months ago, which resulted a huge increase in vehicle importations, there is a huge competition in the vehicle auctions in Japan and the prices of used vehicles have increased rapidly. This situation has become aggravated, because most of the vehicle importers thought that this reduction was given only for a short period of time, and imported as much vehicles as they can. These artificial price increases will be in continuation with the permits as the importers who still maintain huge stocks cannot sell those for the permit holders but have to import more vehicles again. This time it may be worse as the valid period of the permit (of a used vehicle) is only an year. Hence they will try to keep higher profit margins through permit importations to cover the losses incurred due to their previous importations (I heard some importers charge more than Rs. 600,000) which will be ultimately taken by the pocket of these govt. executives who earn a salary which can barely cover their day to day expenses and got less than Rs. 2000 salary hike from the budget.
Sir, while thanking you for reading this long mail, we really do hope that you will direct the Department of TTIP to reduce the tax rates at least for the amount which was offered by the vehicle permit in 2008 (ie. 25% ~ 45%). We think the Dept. of TTIP which hurriedly amended the previous permit to let the buyers to sell their vehicles imported through the concessions given by the permit issued in 2008 (though we do not oppose that, we think the decision itself contradicts with the basic idea of issuing the vehicle permit and treat us as businessmen who are involved in vehicle business with the permits as many politicians tend to do. Or else how can one justify selling the vehicles they use, as they are not entitled to get an another permit within 5 yrs?) will understand the problems faced by the members of All Island Services and at least will amend the circular to provide the same concessions (ie. Tax within 25% ~ 45% and eligibility of 5 years) for the members of All Island Servies if not for all, as Semi-Govt. Officials were not entitled for the permits before (if it is the reason for increasing the tax rates and eligibility)
Sir, the membership is looking forward for a favorable decision.
PS: Sir, though this doesn’t directly relates to the grievances of the members of All Island Services, we thought of mentioning this to you as we see the argument made by these vehicle agents (including who assemble vehicles locally) has a point. They say that the limitations of CIF and Engine Capacity is adhoc and if the MoF have informed them early they should have provided the details of the models they offered last time. They say that now they have to negotiate with the manufacturers to change certain items to match the conditions (including the engines) and that is the reason they cannot tell the exact prices even after 2 months.
Hence, We would like to suggest MoF to at least use some kind of a vehicle as the index (eg: BigMac index in calculating the Purchasing Power Parity in economics) in the future, when deciding the ceiling of the CIF and Engine capacity. Sir, Sorry for bothering you amongst your busy schedule, with such a long mail.
Udesh I. W. SeneviratnaMeio University Graduate SchoolRoom 201,International Students Centre,1220-1 Bimata, Nago-Shi,905-0005OKINAWA,JAPAN.
