ECONOMYNEXT – Sri Lanka’s car import relaxation will be linked to ending the practice of giving permits to special interest groups like civil servants, according to an International Monetary Fund program.
Sri Lanka has provided an initial plan to remove vehicle imports by May 21 and has pledged to give a detailed one by June 15.
“This finalized plan is tied to removing tax exemptions on imports of motor vehicles granted to specific groups including civil servants to curb any revenue leakages from the lifting of the restrictions,” the IMF program said.
“In order to support the recovery, we will relax restrictions on vehicles used for commercial purposes by June 2024.”
Sri Lanka gives tax slashed vehicles to state workers and completely tax-free vehicles to the elected ruling class.
It is not clear whether the elected ruling class will continue to get tax free vehicles, but there has been growing opposition to the treating a set of people as a privileged elite while taxing the rest of the population to the hilt to maintain them.
Sri Lanka also used to only charge income tax from the commoners and state workers were completely exempt from income tax from 1979 ending equal status seen from British rule.
Equal status was restored by then President Mahinda Rajapaksa.
In a tax law after him, it was proposed to make the President tax exempt.
There was an unusual situation where revenue officials who were collecting taxes, themselves did not pay any taxes.
Sri Lanka central bank staff who are under fire paying themselves high salaries after generating inflation and currency depreciation for the rest of the population especially after 1980, had also made the institution pay PAYE taxes at one time, along with agencies like the Ceylon Electricity Board.
In another discriminatory move, legislators and ministers get pensions after 5 years as do some of their personal staff. In Sri Lanka ministers appoints wives and children as personal staff to get pensions.