CMTA says Govt.’s new vehicle valuation system unfair

• Franchise holders opine Govt. should not compare and confuse valuation process of brand new vehicles with used car imports
• Says internal inefficiency of Govt. and systems shouldn’t affect industry
• Country yet to have foolproof system to detect undervalued vehicles that come as used vehicles 
• CMTA to meet Finance Minister and Premier’s Senior Advisor R. Paskaralingam to get redress
• Urges authorities to adopt systems that promote ethical business practices

By Charumini de Silva

The Ceylon Motor Traders Association (CMTA) has raised concerns over the recent policy changes made by the Government in the valuation process of used and brand new vehicles, asserting the system being adopted was unfair.

Noting that CMTA members represent franchise holders, they asserted that the Government should not compare and confuse the valuation process of brand new cars with used car imports.

“The whole issue is an outcome of successive Governments having no foolproof system to detect and detain undervalued vehicles that come into the country under the “used vehicles” category. By trying to sort out the undervaluation of used cars the authorities had confused the whole valuation system including the valuation and tax system of brand new vehicles. There is no need for them to apply this across the board when the problem is with the used car valuation process,” CMTA President Gihan Pilapitiya told the Daily FT. The association pointed out that it had no issue if the Government had to increase taxes for different reasons, but emphasised that it had to be done equally where no party would be affected unfairly.

“The Government’s justification is that it is trying to capture the undervalued vehicles through this new system, but that is an internal inefficiency of the Government and the system it has put in place, which it will have to sort out separately. However, it is not fair to change the tax system such as the new unit rate system and interfere with the natural competitiveness between products,” Pilapitiya stressed. 

He said that the CMTA is in agreement with fair adjustments in taxes if the Government wanted to increase taxes, but emphasised that it had to be done without manoeuvring with the current differences between products in terms of the actual quality and value.

“The price of a vehicle has to reflect the quality and customer segment it caters to, based on the transacted value and not based on any other criteria ideally. It is technically wrong to charge the same duty from products which are not equal as they have been manufactured under different technology, quality, standards and cater to different market segments,” he added.

Pilapitiya stated that the Government sometime previously wanted the confirmation of pricing from the manufacturers themselves, to which the association members agreed and provided certificates requested.

“It was accepted by the Customs at that time and our vehicles were cleared based on the certification given by the manufactures. However, because the Government had increased the unit rate value to a much higher level in order to ensure that actual purchase price does not come into play unless if a product is extremely high in its transacted price,” he explained.

CMTA said that it had already informed its stance to the Finance Ministry and was awaiting a response. “We have requested a meeting with Finance Minister Ravi Karunanayake and informed Senior Advisor to the Prime Minister R. Paskaralingam as well, about this matter. We are waiting for feedback from them,” he said. 

During the past eight months CMTA has met the Minister Karunanayake seven to eight times and the last meeting was just before Minister left for the G7 meeting in Japan.

Pilapitiya said as of yesterday they found that many heads of diplomatic missions have also spoken to the Government with regards to this new method of duty calculation, as it does not treat products manufactured in different countries on the merit of the product which is the transacted value. 

“CMTA comprises of all the companies that conduct professional business and is supportive of positive initiatives of the Government. However, we do not see equality in the current system of taxation and hence we urge the authorities to adopt a system that promotes ethical business practices,” Pilapitiya stated.

Ravi K assures vehicle importers no further tax revisions for 2 years

Finance Minister Ravi Karunanayake has assured vehicle importers that there will be no further revision in taxation for the next two years.

This guarantee was conveyed when members of the Vehicle Importers Association of Sri Lanka (VIASL) and the Vehicle Importers Association of Lanka (VIAL) members met Minister Karunanayake on Saturday along with other senior Government officials.

According to the importers who attended the meeting key highlights were Government’s pledges on policy consistency for the next two years, decision to waive off the 10% re-export levy and the new valuation process.

“We welcome theses decision made by the Finance Minister and hope that these would help to stabilise the industry,” a vehicle importer present at the meeting but who wished anonymity, told the Daily FT.