Member of Parliament Ravi Karunanayake has raised concerns over the current situation in the vehicle market, noting that despite the government removing restrictions imposed on vehicle imports, the high prices are deterring consumers from purchasing vehicles.
Speaking in parliament, Karunanayake explained that small vehicles were once available for around Rs. 1.2 million but now even motorcycles cost the same amount.
He pointed out that although letters of credit have been opened to facilitate vehicle imports, it has amounted to around USD 82 million, far below government projections.
Early data also suggests an underwhelming interest in opening letters of credit for vehicle imports.
Karunanayake emphasized that although the government had set aside USD 1 billion for vehicle imports, only about 8% of that amount has been utilized so far.
Meanwhile, Deputy Minister of Finance Prof. Anil Jayantha said the government may consider revising the newly imposed vehicle taxes downwards, if demand fails to materialise to earn Rs. 700 billion from vehicle related tax revenue by the year end.
The Central Bank recently noted that it has not observed a significant spike in forex demand for automobile imports, potentially undermining fiscal hopes of raising tax revenue to 15.1% of GDP in 2025.
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