A Senior Economist yesterday slammed the Government’s decision to reduce the duty imposed on certain vehicles and claimed that the decision would affect the Balance of Payment (BOP) of the country.
Senior Lecturer of the University of Colombo, Department of Economics, Dr.Lalithasiri Gunaruwan told Ceylon Today that by reducing the import duty on vehicles, the Government was causing a drain in foreign exchange, which subsequently could lead to an exchange rate crisis.
“We allow a drain in foreign exchange, then complain about an exchange rate crisis and then to get out of the crisis we sell our assets to foreigners to earn dollars. What kind of economic policy is this?”, he queried.
Dr. Gunaruwan also emphasized import substitution measures to prevent the BOP crisis.
On Thursday(17), the Finance Ministry announced that prices of motorcycles, mini trucks and single cabs were expected to reduce due to the reduction of duty rates imposed on motorcycles. Accordingly, the Ad-valorem excise duty rate of 90% is removed with effect from midnight Thursday and that will have a significant effect on the price of motorcycles.
Further, the duty charged for motorcycles will be based on engine capacity and there will be a substantial price reduction, particularly for Japanese motorcycles.
According to duty revisions the price of a motorcycle will be reduced from Rs.50,000 – Rs. 100,000.
In addition, the price of a single cab is expected to reduce by Rs 300,000 while the price of a mini truck is also expected to reduce by the same amount.