The Economic Effects on a Country After War Essay

After the 30 old ages of barbarous war now Sri Lanka is on the border of come ining a new epoch of growing. As the state moves from a war economic system to a peace economic system, there are many challenges for the development of the state. As the Sri Lankan authorities continues to put in the Reconstruction of the conflict-affected parts, raising authorities gross without smothering the concern environment will certainly be a ambitious undertaking. From 20.4 % in 1995, Sri Lanka ‘s gross to Gross Domestic Product ( GDP ) ratio has steadily declined to a low 14.9 % in 2008. In this context, bettering revenue enhancement gross coevals from the current 14.9 % of GDP to 16.9 % of GDP by 2011, a mark set by the Government of Sri Lanka, will necessitate a scope of reforms to the current revenue enhancement construction and revenue enhancement disposal.

2. Consequently, the Sri Lankan authorities late announced several alterations to the import revenue enhancement government with consequence from 01st June 2010. These include the decrease in the figure of duty sets, decrease in import responsibilities, remotion of the 15 % surcharge on import responsibility and remotion of revenue enhancements such as the VAT and Cess on some of the points.

3. Through the above decrease, the authorities slashed vehicle import levies by around 50 % with the remotion of two out of nine revenue enhancements and levies imposed on imported motor vehicles ( i.e. 15 % surcharge on usage responsibility and the CESS ) anticipating to ease more imports and to develop the conveyance sector in the state. Harmonizing to the import revenue enhancement Act on vehicles, it restricted the importing of used vehicles older than 3 A? old ages. The authorities expected to assist raise auto import Numberss to the state as autos are taxed on mean 300 % upon import which will assist to hike vehicle imports significantly.

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4. Further the Government expected to go through down the benefit to the populace, which will in bend earn more gross to the Government by manner of revenue enhancements, as more volume of vehicles will be imported. The Government has expected a win-win state of affairs with this. As per the inclination in Sri Lanka, bulk hoped that they will be able to purchase a Nipponese manufactured vehicle for a decreased sum and this decrease will impact on the 2nd manus vehicle market every bit good, which will be helpful particularly for the in-between income degree people excessively.

Chapter 2

Methodology

Scope OF THE STUDY

1. The range of this research is to garner the positions and thoughts of public sing the revenue enhancement decrease imposed by the Sri Lankan authorities and to place its impacts.

PROBLEM STATEMENT

2. Even though the Sri Lankan authorities has reduced the import responsibilities on motor vehicles anticipating a lessening in vehicle monetary values, it has been observed that this benefit has non gone through the vehicle monetary values of bulk demands. With this revenue enhancement decrease bulk expected a large enlargement at local vehicle market every bit good as a monetary value lessening on 2nd manus vehicle market. However the bulk, in-between income degree people have failed to carry through theIr desire to purchase a Nipponese manufactured vehicle but have to be satisfied with a vehicle like “ Maruti 800 ” or “ Alto ” which are in a mean monetary value scope. Hence, the quandary of this nature ( though the revenue enhancement lessening, the vehicle monetary values are non changed ) is a affair needs to be investigated.

RESEARCH HYPOTHESIS

3. Even though the Sri Lankan authorities removed two levies which was imposed on imported motor vehicles, the bulk of the population in Sri Lanka did non acquire the benefits expected by the authorities through the revenue enhancement decrease.

Aim

4. General Objective. To look into whether, the bulk of Sri Lankans acquire the benefit given by the Sri Lankan Government by cut downing vehicle import revenue enhancement.

5. Specific Objectives. The specific aims of the research are as follows ;

To place how the revenue enhancement decreases effected on vehicles importing to Sri Lanka.

To place the troubles faced by the bulk of Sri Lankans when buying a vehicle harmonizing to their pick. ( Brand New/ Reconditioned/ Second manus ) .

To place the impact of revenue enhancement lessening on the Sri Lankan 2nd manus vehicle market.

To place the impact of revenue enhancement lessening on the vehicles that piecing in Sri Lanka.

To place the impact of revenue enhancement lessening on the Sri Lankan economic system.

METHOD OF DATA COLLECTION

6. This survey was carried out based on a study. Further, a study was carried out to look into whether any secondary informations are available in this issue by mentioning literature. It was intended to garner information as follows ;

7. Primary Source Primary beginning of aggregation of information was done through interviews with some selected cardinal persons ;

a. Mr Udayasiri Ariyarathne, Assistant General Manager ( Institutional Gross saless )

Micro Cars Ltd,

b. Mr Ivon Rathnayake, Assistant Manager ( Administration )

Toyota Lanka ( Pvt ) Ltd,

c. Mr Menake Dhanawardhana, Senior Manager ( Gross saless )

Associated Motor Ways ( AMW )

as they are the forces who can be considered as good experienced in the industry and questionnaires Q-1 ( Annex “ A ” ) and Q-2 ( Annex “ B ” ) were distributed among the individuals who purchased a vehicle during the last 4 months and auto sale proprietors severally. Questionnaire Q-3 ( Annex “ C ” ) was distributed among the individuals with several income degrees who are willing to buy a vehicle.

8. Secondary Source Secondary beginning of aggregation of information was done through Sri Lanka Customs, Central Bank Annual Report 2009, paper articles, web articles and relevant databases.

Sampling

9. Samples were been selected utilizing random trying method as follows.

a. Sample-I. Wholly 20 respondents who purchased a vehicle during the last 4 months consist of upper category and in-between category.

B. Sample -II. Wholly 10 respondents, auto sale proprietors, consist of 2nd manus auto sale proprietors and trade name new/reconditioned imported auto gross revenues proprietors.

c. Sample -III. Wholly 20 respondents with several income degrees who are willing to buy a vehicle.

TECHNIQUES OF DATA ANALYSIS

10. The information obtained through the interviews, questionnaire and through literature was subjected to qualitative analysis.

Restriction

11. The clip available to carry on this research was 3 months. The length of the paper was been limited to 5000 words, and it was non possible to roll up informations from forces from assorted countries in Sri Lanka. Hence, the research was accomplished through the informations obtained from the forces of Colombo territory.

THE STRUCTURE OF THE PAPER

12. This research paper is structured as follows ;

a. Chapter I This is the introductory portion of the research paper.

B. Chapter II This Chapter covers the Methodology.

Scope of the survey

Problem Statement

Research hypothesis

Aims

Method of informations aggregation

Sampling

Techniques informations analysis

Restrictions

c. CHAPTER III This Chapter consist the background of the responsibility decrease introduced by the Sri Lankan authorities on imported motor vehicles and the scheduled manner of adapt the new responsibility lessening and the expected alterations to the vehicle market every bit good to the Sri Lankan economic system.

d. Chapter IV This Chapter consist the information gathered in relation to the research.

e. CHAPTER V This Chapter provides analysis of informations obtained through the questionnaires Q-1, Q-2 and Q-3 administered among 50 respondents.

( Questionnaires are annexed as Annex A, Annex B and Annex C ) and the relevant findings of the research survey.

f. CHAPTER VI This Chapter covers the decision with the recommendations.

Chapter 3

Background

THE PROPOSAL OF DUTY DECREASE ON IMPORTED VEHICLES

1. The Sri Lankan authorities removed two import levies out of nine levies imposed on imported motor vehicles and the nine set import revenue enhancement construction on cars were included six fixed revenue enhancements and three changing revenue enhancements.

2. ‘Fixed ‘ revenue enhancements

a. Port and Airport Development Levy ( PAL ) of 5 % ,

B. Surcharge of 15 % ,

c. Nation Building Tax ( NBT ) of 3 % ,

d. Social Responsibility Levy ( SRL ) of 1.5 % ,

e. Road and Infrastructure Development Levy ( RIDL ) of 2.5 % ,

f. Value Added Tax ( VAT ) of 20 %

3. ‘Varying ‘ revenue enhancements

a. Customss Import Duty ( CID ) ,

b. Cess

c. Excise Duty

4. From the revenue enhancement decrease the authorities removed the 15 % surcharge on Customss Duty ( Annex D ) and CESS, decreased the Excise Duty ( Annex E ) on motor vehicle imports. This decrease narrowed the scope of revenue enhancements from 90 % to 280 % of the Cost, Insurance and Freight ( CIF value ) . Before the decrease, the revenue enhancements and levies added 150 % to 500 % to the cost of an imported motor vehicle. At that clip the import responsibility and levies on a midsized household auto was about 300 % of the CIF value.

5. There was a 52 % bead in the figure of vehicle imported to Sri Lanka in 2009 when compared to the figure of vehicles imported in 2008. Government revenue enhancement gross, in contrast to Rupees.17.4 billion earned in 2007, dropped to Rupees 11.06 billion in 2008 and Rupees 3.25 billion in 2009. With this continues bead in gross, the Sri Lankan authorities imposed an import responsibility decrease anticipating that the motor vehicle gross revenues which had dried up to pick up sharply over the 2nd half of 2010 hiking authorities gross by widening the trade shortage through an addition in vehicle imports.

EXPECTED CHANGES TO THE VEHICLE MARKET

6. The expected alterations through the decrease were to give the benefit to both importers and purchasers as the monetary values of autos will come down drastically and it was expected that more trade name new and reconditioned vehicle will be enter to the market and the monetary values of the 2nd manus vehicle market besides will come down at the same time doing an car world even for less flush households. A lessening in the monetary values of mean ranged vehicles such as Maruti which will be a benefit to the bulk, in-between income individuals. Further hoped that more figure of mean ranged vehicles will come in to the market than the luxury vehicles.

7. It was expected that an mean vehicle may come down by Rupees 300,000 and a Sport Utility Vehicles ( SUV ) by about Rupees 3 million. An Indian made Maruti 800 which had attracted excise duties up to 183 % of its value will come down to 90 % and Maruti 800 which was priced around Rs.1.3 million will come down to around Rs.790,000 after the decrease. Maruti Alto which was sold at 1.7 million will come down to around Rs.1.3 million. The trade name new Indian manufactured Suzuki Swift which was priced Rs.3.1 million earlier will come down to around Rs. 2.4 million. The KIA Sorento ( Diesel ) Jeep which was around Rs.14.8 million will come down to around Rs.10 million including VAT. Reconditioned Nissan vehicle which was sold for around Rs.23 million would come down to around Rs.20 million.

8. With the monetary value lessening it was expected that the demand for little vehicles would increase and the diminishing monetary values of vehicles will be a benefit for the travel industry every bit good and will back up the spread outing tourer activity and lifting degree of tourer reachings.

EXPECTED EFFECTS TO THE ECONOMY

9. The authorities took the determination particularly to gain more gross by manner of import revenue enhancements and through the enrollments as more volume of vehicles will be imported. At the same clip the authorities expected to acquire a uninterrupted income through the licensing of vehicles and other related incomes such as mulcts, transportation fees etc. After the economic crisis faced during the last few old ages and instability of investings in the state every bit good as due to the terminal of the 30 twelvemonth war, with the encouragement in the economic system the authorities expected to present the revenue enhancement decrease as a positive factor for the investors.

10. It was expected that the people will purchase more vehicles and so vehicle importers and the insurance concern would besides acquire the benefit from the pickup in new vehicle enrollment and finance sector every bit good as crude oil and conveyance sectors might hold positive impact. Further the Bankss would acquire the benefit from increased trade finance activity while an expected addition in imports could make moderate volatility on exchange rates.

Chapter 4

THE Result OF THE DUTY DECREASE ON MOTOR VEHICLES

1. The information gathered through the questionnaires and the interviews with cardinal persons are summarized as follows.

INCOME LEVELS OF THE SRI LANKAN POPULATIONS

2. The inside informations of the current ( household ) monthly income degrees of the Sri Lankan population have been identified as follows ;

Less than Rs.30,000 ( lower income )

Between Rs.30,000 – Rs. 100,000 ( in-between income )

More than Rs. 100,000 ( high income )

Figure 1: Income Levels of Sri Lankan population

2. The new duty construction imposed in 1 June 2010 in shown in the undermentioned tabular array.

Table 1: Duty Structure for Imports 2010

Table 2: Difference between the old and new revenue enhancement construction on import of vehicles at a glimpse.

Vehicle Category

Previous Tax %

New Tax %

Change %

Cars – Gasoline

& lt ; 1000cc

187

90

52 %

1000cc & lt ; 1600cc

217

118

46 %

1600cc & lt ; 2000cc

288

150

48 %

2000cc & lt ; 3000cc

299

150

50 %

3000cc & gt ;

299

190

36 %

Cars – Diesel

& lt ; 1600cc

12

178

57 %

1600cc & lt ; 2000cc

510

185

64 %

2000cc & lt ; 2500cc

524

271

48 %

2500cc & gt ;

524

280

47 %

Cars – Electric

Any

144

68

53 %

Auto Trishaws

Gasoline

68

40

41 %

Diesel

47

40

15 %

LG Gas

43

40

7 %

Electric

50

40

20 %

Avant-gardes – Gasoline

13 & lt ; 17 individuals

187

121

35 %

Avant-gardes – Diesel

13 & lt ; 17 individuals

281

152

46 %

Double Cab

Any

366

152

58 %

Luxury Vehicles – Gasoline

10 & lt ; 13 individuals

299

181

39 %

Luxury Vehicles – Diesel

10 & lt ; 13 individuals

524

290

45 %

Motor Cycles

Any

68

68

0 %

3. Comparison of old and new duty construction for Cars, Vans, Double Cabs and Luxury vehicles are shown in the undermentioned graphs.

Graph 1: Comparison of old and new duty construction for Petrol Cars

Graph 2: Comparison of old and new duty construction for Diesel Cars

Graph 3: Comparison of old and new duty construction for Avant-gardes

Graph 4: Comparison of old and new duty construction for Double Cabs and Luxury Vehicles

4. The inside informations of importing of vehicles after the revenue enhancement decrease in 2010 are shown in the undermentioned Table.

Table 2: Imported measures of Vehicles ( 2008- Sept. 2010 )

Year

HS Heading

Description

Entire Unit of measurements Imported

2008

8701

Tractors

32,124

8702

Public Transport type Passenger Motor vehicle

1,290

8703

Motor autos and other motor vehicles for the conveyance of rider

65,037

8704

Motor vehicle for the conveyance of goods

15,113

2008 Sum

113,564

2009

8701

Tractors

14,172

8702

Public Transport type Passenger Motor vehicle

784

8703

Motor autos and other motor vehicles for the conveyance of rider

37,791

8704

Motor vehicle for the conveyance of goods

7,140

2009 Sum

59,887

2010 upto 30thSept.

8701

Tractors

16,680

8702

Public Transport type Passenger Motor vehicle

1,900

8703

Motor autos and other motor vehicles for the conveyance of rider

79,022

8704

Motor vehicle for the conveyance of goods

15,028

2010 Sum

112,630

Grand Total

286,081

5. The inside informations of importing of vehicles in January 2010 and after the revenue enhancement decrease in June 2010 are shown in the undermentioned Table.

Table 3: Number of ‘Brand New ‘ and ‘Reconditioned ‘ vehicles imported in 2010

Vehicle type

January

June

July

August

September

October

Brand New

Cars

149

171

638

1,085

1,521

2,576

Avant-gardes

2

11

16

14

26

30

Jeeps/Cabs

62

76

143

142

158

173

Reconditioned

Cars

56

526

1,648

2,760

3,125

3,139

Avant-gardes

6

74

276

353

320

358

Jeeps/Cabs

36

34

128

155

106

127

6. The inside informations of the imposts gross of vehicles imported to Sri Lanka from January-October 2010 is shown in the undermentioned graph.

Graph 5: Customss gross of vehicles imported to Sri Lanka from Jan-Oct 2010

7. The inside informations of the entire responsibility and revenue enhancement collectible to Customs for reconditioned vehicles are shown in the undermentioned tabular array.

Table 4: Entire responsibility and revenue enhancement collectible to Customs for reconditioned vehicles

Vehicle type

Entire revenue enhancement payable to Customs

Small autos less than 990 milliliter

Rs.1.1 m – 1.4 m

Cars less than 1290 milliliter

Rs.1.3 m – Rs.1.5 m

Cars less than 1490 milliliter

Rs.1.2 m – Rs.2.6 m

Avant-gardes diesel ( approx. )

Rs.2.6 m

Jeeps and SUVs less than 2360 milliliter

Rs.2.9 m – Rs.4.2 m

( The rate is the norm for popular trade names like Toyota/Nissan )

8. The inside informations of the monetary value alteration of the imported vehicles, before the revenue enhancement decrease and in October 2010 are shown in the undermentioned tabular array.

Table 5: Price alteration of the vehicle before and after the revenue enhancement decrease

Vehicle

Monetary value before the revenue enhancement decrease

( Rs Mn )

Monetary value after the revenue enhancement decrease

as of Oct. 2010

( Rs Mn )

Monetary value

difference

( Rs Mn )

Monetary value

difference

( % )

Toyota Yaris

5.9

4.5

1.4

23 %

Toyota 141 aˆ¦ .

6

5.4

0.6

10 %

Toyota Avanza ( Indonesian )

4.2

3.2

1

23 %

Toyota Double Cab

11

6.6

4.4

40 %

Toyota Prado VDJ 200

36

27

9

25 %

55

38

17

31 %

Suzuki Maruti 800

1.375

1.035

0.34

24 %

Suzuki Alto

1.525

1.295

0.23

15 %

Suzuki Zen

1.890

1.610

0.28

14 %

Suzuki Swift ( Indian )

2.6

2.35

0.25

10 %

Chapter 5

Analysis

1. For the Research, three questionnaires Q-1, Q-2 and Q-3 were administered among 50 ( 20, 10 and 20 severally ) respondents selected indiscriminately and three cardinal persons were selected for interviews ( Assistant General Manager ( Institutional Gross saless ) of Micro Cars Ltd, Assistant Manager ( Administration ) Toyota Lanka ( Pvt ) Ltd, Senior Manager ( Gross saless ) Associated Motor Ways )

2. Consequently analysis of informations gathered through the questionnaires and the identified grounds during the interviews are mentioned herein as relevant to the aims stipulated in the Chapter 2.

Analysis OF SPECIFIC OBJECTIVES

How the revenue enhancement lessening effected on vehicles importing to Sri Lanka

3. The demand for registered and un-registered vehicles has increased well and particularly demand for imported vehicles have increased immensely every bit good as demand for the little autos besides increased significantly ( eg. 150 units to over 400 units in two months – Ceylon Motor Trading Association ) .

4. The undermentioned graph shows the measures of vehicle imported to Sri Lanka from 2008 to September 2010.

Chart 5: Imported measures of Vehicles ( 2008- Sept. 2010 )

5. Detailss of addition in mean gross revenues per month in Indian manufactured Maruti and Toyota vehicles in 2010 are shown in the undermentioned graph.

Graph 6: Average gross revenues of Maruti & A ; Toyota vehicles per month – 2010

6. The response of the 20 respondents to the inquiry No. 3 ( What is the position of the vehicle ( Imported/Second manus ) ? ) of Questionnaire No.Q-1 is as follows.

8. The response of the 20 respondents to the inquiry No. 13 ( Did the revenue enhancement decrease encourage you to buy a vehicle? ) of Questionnaire No.Q-1 is as follows.

9. The response of the 10 respondents to the inquiry No. 6 ( Have you experienced any increased in gross revenues of vehicles after the revenue enhancement decrease? ) of Questionnaire No.Q-2 is as follows.

10. The response of the 20 respondents to the inquiry No. 12 ( Did the revenue enhancement decrease encourage you to buy a vehicle? ) of Questionnaire No.Q-3 is as follows.

11. Hence by analyzing the replies given in the above, it can be justified that the revenue enhancement lessening have effected positively on vehicle importing to Sri Lanka. After the revenue enhancement decrease the figure of imports have increased.

The troubles faced by the bulk of Sri Lankans when buying a vehicle harmonizing to their pick ( trade name new/second hand/unregistered ) .

12. The response of the 20 respondents to the inquiry No.6 ( What is the trade name of the vehicle that you have purchased, Japanese/Indian/Other? ) of Questionnaire No.Q-1 is as follows.

13. The response of the 20 respondents to the inquiry No.7 ( Is it your preferable trade name? ) of Questionnaire No.Q-1 is as follows.

14. The response of the 50 respondents to the inquiry Nos.9, 8 and 5 ( What is the most demanding monetary value scope of the vehicles ) of Questionnaires No.Q-1, Q-2 and Q-3 severally is as follows.

15. After analyzing the replies given in the above, it can be justified that even though the bulk expected to purchase Nipponese manufactured vehicle ( Brand New or Re Condition ) , they have non acquire the chance to purchase a Nipponese manufactured vehicle harmonizing to their pick. As the most demanding value scope for vehicles could be identified as the monetary value scope between 1 to 2 million and that the monetary values of the Nipponese manufactured Brand New or Re Condition vehicles are beyond that scope. The bulk have to be satisfied with a budget and economic system auto such as Indian manufactured vehicle as they do non prefer to purchase a Korean or Malayan made vehicles or they have to be satisfied with a 2nd manus Nipponese vehicle.

16. Further, AMW is the lone agent in Sri Lanka who imports Indian Suzuki vehicles. As explained by the Gross saless Manager of the AMW, if person orders a Maruti 800 vehicle, he has to wait for approximately six month until the vehicle arrives to Sri Lanka and the AMW soon holding a backlog for approximately 7,000 delay listed vehicles. If the authorities increase the revenue enhancement construction once more, those people will non acquire the benefit once the vehicle arrives to Sri Lanka but have to purchase the 1 they have already orders paying the sum at that clip.

17. Hence by analyzing the inside informations gathers with respect to the above, it can be justified that bulk have non acquire the ability to buy a vehicle harmonizing to their pick.

The impact of revenue enhancement lessening on the Sri Lankan 2nd manus vehicle market.

18. The response of the 10 respondents to the inquiry No.10 ( Has the revenue enhancement decrease decreased the monetary values of the vehicles that you sell? ) of Questionnaire No.Q-2 is as follows. ( The 7/10 respondents who said ‘No ‘ were local auto gross revenues proprietors. )

19. The response of the 20 respondents to the inquiry No.7 ( What is the type of vehicle you are seeking to buy ( Brand new/Reconditioned/Second manus? ) of Questionnaire No.Q-3 is as follows.

20. After analyzing the replies given in the above, it can be justified that there is no important lessening in the monetary values of the 2nd manus vehicles as the people who own such vehicles hesitates to sell their vehicle at a lower monetary value as it is non possible to purchase a vehicle

for the same sum. Further there is no lessening in the monetary value of the Indian Suzuki vehicles as when person wants to purchase a Suzuki vehicle, he has to waitlist for approximately 6 month until the new vehicle arrived to the state. Hence, it was identified that if person wants to purchase a 2nd manus vehicle, he has to seek for a long clip blowing clip to acquire a good vehicle. At the same clip 2nd manus auto sale proprietors besides maintained the same monetary values without cut downing as they holding adequate experiences on this sort of state of affairss.

21. Hence, it can be justified that the revenue enhancement lessening have non effected significantly to the 2nd manus vehicle market.

The impacts of revenue enhancement lessening on the vehicles that piecing in Sri Lanka.

22. The lone auto manufactured/assembled in Sri Lanka is the ‘Micro Cars Ltd ‘ and they assemble the vehicles by importing spares and have to pay immense import revenue enhancement and other revenue enhancements such as BTT, VAT which imposed on the local companies. As mentioned by the Assistant General Manager of Micro Cars Ltd, most of the purchasers purchased a Micro vehicle due to the monetary value spread in between a trade name new imported vehicle and a Micro vehicle. But with the revenue enhancement decrease the spread between these have come down and it has encouraged many people from purchasing this locally manufactured auto.

23. Detailss of mean gross revenues per month in locally manufactured Micro vehicles in 2010 are shown in the undermentioned graph.

Graph 7: Average gross revenues of Micro vehicles per month – 2010

24. Harmonizing to the inside informations gathered through the interview, it was identified that the gross revenues and concentration of the people have increased with respect to the locally assembled Micro autos so they expect that the gross revenues of the company will increase significantly in the hereafter.

25. Hence by analyzing the determination through the interviews it can be justified that the revenue enhancement lessening have effected positively on the gross revenues of the vehicles that assembled in Sri Lanka.

The impact of revenue enhancement lessening on the Sri Lankan economic system.

27. Detailss of the imposts gross of vehicles imported to Sri Lanka from January to October 2010 is shown in the undermentioned graph.

Graph 8: Customss gross of vehicles imported to Sri Lanka from Jan-Oct 2010

28. The gross collected from vehicle imports after the revenue enhancement decrease in June 2010 shows a major addition when compared to the gross aggregation in January Rs.1.8 billion. Hence the authorities has got more gross through the revenue enhancement decrease as the figure of vehicle imports have been increased significantly.

28. Even though the authorities have encouraged the importing of vehicles through the revenue enhancement decrease to acquire more gross through the increasing figure of vehicle imports this will impact the higher foreign exchange escape from the state continuously as the higher fuel ingestion, incurring more fixs taking to the increased import of trim parts i.e.

28. Presently it takes more than 20 proceedingss to go 05 kilometers in haste hours in the Colombo country due to heavy traffic. The present route installations are non equal to suit the increasing figure so the authorities will hold to pass immense outgo on developing roads and main roads every bit good for the care of roads.

29. Positively, even though the Leasing concerns face some short term emphasis in its assts as the value of collateral on chartered vehicles bead, an addition in new concern volumes would more than compensate for this in the average term as the vehicle renting volumes rose aggressively and money comes to economic system.

30. In the first case the insurance sector got affected in the short-run by lower motor premiums on insurance reclamations as a consequence of the diminution in motor vehicle monetary values. But ulterior insurance concern got the benefit from the pickup in new vehicle enrollment.

Findingss

31. As the old responsibility construction did non promote the import of diesel-powered double intent vehicle, an ageing fleet of new waves and dual cabs every bit good as a big figure of illicitly assembled landrovers came into the market. But, as the new responsibility encouraged the import of second-hand Diesel cabs and new waves from Japan every bit good as South East Asia which farther depressed the monetary values. Further the auto sale proprietors who had stocks had to sell their stock at a loss after the revenue enhancement decrease.

33. Due to the grasp of the Yen, the monetary values of the Nipponese manufactured autos increased than the monetary value what it was before the responsibility decrease. A Nipponese vehicle worth around Yen 1 million two old ages ago which was selling at a Rs. 3.6 million in Sri Lanka so, under the exchange rate of Rs. 0.9 per Hankering. But in the last two old ages as the Hankering has appreciated by about 45 % , the exchange rate has increased to Rs.1.3 per Yen. A vehicle worth Yen 1 million is over Rs.3.611 million in Sri Lanka. Hence, the monetary values of the vehicle decreased significantly in Sri Lanka, the monetary values of the Nipponese manufactured vehicle increased by 25 % . However, the Yen quandary has non affected the Indian and Chinese vehicle market in the state.

Determination

34. By analyzing the information gathered through interviews and questionnaires, it was identified that the hypothesis of this research survey is proved as bulk of the Sri Lankan have non acquire the benefits expected by the authorities through the revenue enhancement decrease.

35. As the bulk are in a income degree scope between Rs.30,000/- to Rs.100,000/- which can be assumed as a in-between income degree and most demanding monetary value scope of a vehicle is between Rs.1 M to Rs.2 M they have to be satisfied with a budget and economic system auto such as Indian manufactured or locally made vehicle as the monetary values of the Nipponese manufactured vehicle have non come down due to the grasp of Yen. Hence they have to give up their pick of purchasing a Nipponese manufactured vehicle. But to purchase an Indian made Suzuki vehicle the purchaser have to wait list for about 6 months ( as mentioned by the Gross saless Manager of AMW ) and on the other manus if the authorities increase the revenue enhancement between this period so the purchaser has to pay all the revenue enhancements consequence at that clip. So it is non certain whether the purchaser acquire the benefit of the revenue enhancement decrease or non.

36. As the monetary values of the used vehicles remain unchanged, the in-between category purchasers face troubles to happen a vehicle for their income degree scope every bit good.

Chapter 6

CONCLUSION AND RECOMMENDATIONS

Decision

1. The revenue enhancement decrease has effected in a different manner to the citizens and it effected chiefly on their income degrees. Even though it is a benefit to the purchaser who purchased a vehicle, the affects has been spread through out everyone in the state in the long tally. The fiscal escape which goes out the state by importing more figure of vehicle are the monies that have to utilize for the development of the state and it affect the economic system as the escape of money due to high fuel ingestion in the hereafter every bit good to the environment as more vehicle be used.

2. However the revenue enhancement decrease will increase the figure of importing vehicles with new engineerings which will assist to better our degree of conveyance in the state and as the care, serving will be done locally and it will be a benefit to the lower category and in-between category forces who are engaged in the field and hopefully as the new engineerings will be introduced, the fuel ingestion will be less per vehicle and importing new vehicles will be environment friendly than importing old vehicles.

Recommendation

3. The authorities must promote the importing of trade name new vehicles every bit much as possible and promote exiles to convey in a trade name new vehicle for their private usage as it do non hold much of an impact on the foreign exchange escape.

4. As there is non good public transit system in Sri Lanka, the authorities should promote everyone to purchase the locally manufactured autos by doing them cheaper than the imported opposite numbers.

5. Even though the authorities introduced a steep revenue enhancement cut on vehicle imports which has injected life into the about comatose auto trade, some traders pig-headedly hold the high monetary values trusting that revenue enhancement government will non last excessively long. Hence the authorities should give the populace a dislocation of the monetary values with some illustrations explicating the system decently to avoid alleged unjust pattern rises of the values of the vehicles every bit good as the state of affairss like double rating policies.

6. By importing used vehicles, more impact on the environment is high as the used vehicles are less fuel efficient. So than importing more pollution the authorities should re-think and re-evaluate the policy promoting importing of older vehicles to the state. The authorities should promote the importing of trade name new, economical low terminal autos and deter the import of luxury autos which will do good quality vehicles to be on the new roads and this will besides maintain the environment better from pollution by old hapless quality vehicles. The over ingestion of fuel would do pollution every bit good as the state depending on import more fuel in future as it can be a job if the fuel rate additions in the hereafter.

7. At last it is indispensable to believe of developing a good public transit system such as electric train system, subway systems as they are more low-cost, causes less pollution per traveler, saves batch of clip for all and are more convenient.