Tuesday, 6 August 2013 00:00
Customs has busted a massive online vehicle racket that is believed to have siphoned millions of tax money. Yet this is simply the symptom of a much larger issue of unfair Government policies.
Many people of average income who are deprived of the chance to buy a vehicle due to unfairly high taxes use whatever means available to make their dreams come true. How is it that these people are denied but politicians and other public servants have access to permits, which also take billions from public expenditure?
So far the Government has forgone a staggering Rs. 57 billion in revenue during the past two years in granting duty free concessions for import of vehicles for public servants. The hefty sum was revealed in the Central Bank’s 2012 Annual Report. It said according to the Ministry of Finance and Planning estimates, the Government had forgone Rs. 38.6 billion due to the exemptions of relevant taxes on vehicles procured by public servants on concessionary duty terms in 2012 and in the previous year the figure is estimated at Rs. 18.3 billion.
In addition Transport Minister Kumara Welgama told Parliament in February that an estimated Rs. 6.4 billion was lost in taxes to the Government in 2010 alone. This means that the total amount of losses for the past three years alone is a whopping Rs. 63.4 billion. To put the figure in perspective, this amount would have paid the entire losses incurred by the Ceylon Electricity Board (CEB) in 2012, which would have negated the need to increase tariffs, or would have paid the fertiliser subsidy twice over or funded the Samurdhi program for 10 years. The unfairness is exacerbated by vehicle rackets that are also largely run by public workers.
Welgama in his previous statement had rather boldly remarked that the Department of Motor Traffic was not solely responsible for the tax loss and cited the Import and Export Controller, Customs and the three armed forces as being equally responsible. According to Minister Welgama, permits were issued to import vehicle bodies to replace those damaged in the tsunami. Using such body import permits, while importing bodies, other vehicle parts were also imported evading taxes and vehicles were assembled locally.
The Ministry has a ballpark figure of 19,000 such cases using old vehicle registration documents and using number plates of vehicles sold for scrap with chassis and engine numbers engraved illegally. The Minister had also alleged that this is a racket that employees of the Department of Motor Traffic and the Department of Customs have been engaged in for a number of years.
In the latest avatar, a dummy company was used to advertise vehicles online while various loopholes in the regulation system were used for illegal importation. So confident were the racketeers that they even linked up with the reputed leasing company. The unfair allocation of permits for some and imposing high tax rates for others has spawned a culture – and dare it be said – a justification for crime.
It is certainly ironic that while honest people take out crippling loans or sacrifice their savings to pay for their vehicles, another set is pocketing the revenues that should be added to the public coffers. The sad part is that these are not only racketeers.