Govt. goes ahead with ‘privileged imports’ despite growing crisis

Treasury flooded with applications for duty free cars


By Shamindra Ferdinando

In spite vowing to curb vehicle imports to save foreign exchange and tackle congestion on roads, the government was going ahead of issuing of vehicle permits on concessionary terms to politicians, public servants and professionals, informed sources told The Island.

Asked how many would benefit from the UPFA move, well informed sources said that the Treasury had received thousands of applications so far this year and was in the process of approving them. They were responding to our Thursday’s lead story captioned, "‘Privileged imports’ not affected by duty increases," in the wake of the recent sharp increase of duties on the import of three wheelers, motor cycles and reconditioned vehicles.

The Treasury continued to receive more applications, the sources said.

Beneficiaries included executive level personnel holding administrative, managerial and professional posts in public service or public enterprises to import vehicle or acquire locally assembled vehicles.

The Treasury circular relating to these tax concessions came into operation on Dec. 15, 2010. Many professionals, including doctors, security forces officers, engineers and architects, too, are eligible for the scheme.

Private sector sources alleged that the government was making an attempt to deceive the public, while allowing more ‘privileged imports’ at the expense of the national economy.

The Opposition remained silent on the issue of ‘privileged imports’, though being critical of the latest tax hike affecting ordinary imports, sources alleged.

An irate private sector executive said that the parliament should take up the issue as part of cohesive strategy to cut down on public sector waste and expenditure. The balance of payment was too big issue just to be tackled by restricting the imports of three wheelers, motor cycles and et al, he said.

The source expressed concerned that international lending agencies had failed to pressure the government to make a genuine effort to control widening trade deficit.

 Faced with a growing crisis over balance of payment, the government imposed tax increases of between 60 to 125 percent from the earlier 51 to 100 percent on motor cycles, three wheeler and diesel and petrol hybrid cars.

Tax revision was made in the wake of Treasury Chief Dr. P. B. Jayasundera issuing a series of guidelines to the public sector to curb expenditure with the focus on curbing the country’s staggering oil import bill.

 Sources said that the government was unlikely to suspend ‘privileged imports’ for the time being, though recently taken measures to curtail trade gap weren’t adequate to address the contentious issue of balance of payment crisis.

Apart from parliamentarians, the UPFA had included members of Provincial Councils and heads of Local Government authorities, too, in the list of those authorized to import vehicles on concessionary terms, sources said.

 Asked whether the vehicles imported under various concessionary terms could be identified to prevent misuse of duty free permits, sources said that earlier duty free vehicles had ‘P’ on their registration plates in red, though the government did away with that practice.

That had allowed those acquiring duty free vehicles, including politicians to sell them before using them for periods stipulated by the Treasury. Sources pointed out that none of them, including many politicians, had been punished as those supposed to implement the law, too, engage in malpractices.

 The government had adopted four specific measures to curtail the rapidly growing trade deficit, limit fuel consumption and increase revenue. These comprised depreciation of exchange rate, increase in interest rates, upward revision of fuel and electricity prices and increase in import duty.

 Speaking on the condition of anonymity, officials indicated that further measures would be necessary to curtain the trade gap. They asserted that during the 2008 economic crisis, the government had imposed measures tougher than the present tax increases. They agreed that curbs on overseas travel, too, would be necessary, to control outflow of foreign exchange.

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