The Hon. Sunil Watagala, Attorney-at-Law - Deputy Minister of Public Security and Parliamentary Affairs

¶ 01 Hon. Presiding Member, before addressing the core regulation under the Excise (Special Provisions) Act, let me respond to several points raised by the Opposition.

¶ 02 They lectured us about a “fair tax policy.” But history shows times when a Finance Minister father served while the son imported luxury vehicles and a Gazette reduced taxes for those specific vehicles. That is what the record says.

¶ 03 Society now talks about electric vehicles. Yet, certain finance ministers who had the chance to promote EVs, instead favoured petrol and diesel vehicles, abandoning EV promotion due to some privileges. If you want to talk tax policy, the worst tax policies were earlier.

¶ 04 Hon. Shanakkhiyan Rasamanickam and others spoke about local authorities and reduced vote shares. Hon. Presiding Member, we hold a clear mandate in 152 local authorities, enough for independent control, and in 267 we are ahead in aggregate. The Opposition’s so‑called “unity” masks their internal problems. Let me ask specifically about Colombo Municipal Council: rumours say you are trying to cobble together fragments to form the council. Could you not even name a mayoral candidate at nomination? It took you a week. That candidate lost in Borella South to our young sister at her first election. Now the defeated mayoral aspirant is attempting conspiracies with fragments.

¶ 05 We challenge you now: name your proposed Mayor and Deputy Mayor for the CMC. You cannot. The moment you name them, your fragments will crumble. We, the National People’s Power, have clearly named our Mayor and Deputy Mayor. Let the country know: the future Mayor of Colombo is not a puppet, but Ms. Balthisaar.

¶ 06 Turning to the Gazette: we are debating the tax on vehicle imports. Under the Excise (Special Provisions) Act, No. 13 of 1989, Gazette Extraordinary No. 2421/42 of 31 January 2025 requires Parliament’s approval. Since excise is applied as a percentage on CIF, and because EV excise rates are considerably lower than for petrol, diesel and hybrids, the gap in excise rates as a percentage remains lower for EVs at comparable price levels. The objective is to reduce forex outflows tied to imports and ensure a balanced, fair taxation framework.

¶ 07 This regulation enables vehicle imports while managing adverse macro impacts, and safeguarding revenue. That is the essence. Under this Gazette, no excise tax is charged on forward‑control electric three‑wheelers with electric motors. For EVs, factors like model year, kW capacity and environmental impact are considered.

¶ 08 There is heavy public debate on vehicle prices. We remember a former President who asked on stage about the price of yams and onions — “Are you comfortable now?” Today, his successors ask us the price of Vitz, Prius, three‑wheelers and motorcycles, and again, “Are you comfortable now?” We are opening imports after five years — remember that.

¶ 09 As a society and a country, we must understand the shift. We cannot talk about vehicles like we once talked about onions; understand the reasons and logic. We believe the public understands this transition. We are pulling our leg out of a trap; the people know this must be done carefully.

¶ 10 We have embarked on a journey with the IMF. It is not a bus or train journey you can step off; it is a flight — you cannot disembark mid‑air. Knowing this, we will not jump out. We must buckle up and complete the flight to reach the terminal safely and then continue our own onward journey. The responsibility to use this aircraft cautiously with all our people on board lies with the Government. Yet, some of those who put us on this flight slap us from time to time asking whether we are not sitting properly.

¶ 11 Analysts say this Gazette both permits imports and makes them more disciplined. While import taxes can bring revenue, the collateral is our reserves. Acting under IMF recommendations to preserve reserve adequacy, these regulations are the medicine that enables facilities under the EFF. We also extend an invitation to mitigate income inequality; this is not a circus invitation. Those who meet their vehicle needs through this framework should also feel the duty to contribute to macro stability voluntarily.

¶ 12 We recall a former Labour Minister who invited migrant workers to remit dollars by throwing sand in their eyes, allowing car imports, leading to thousands of vehicles coming at huge cost. The result? Reserves fell; and both those who imported and those who had the dream, became accused in criminal cases. The Labour Minister alone tightened his belt while the reserves were drained. Not long ago, we lived in a country where Cabinet Ministers tightened their own belts after draining reserves.

¶ 13 Finally, we seek Parliament’s approval for this Gazette which, while protecting reserves, also raises excise and income revenue, and aligns with IMF needs, while allowing a path for vehicles. This is a fair tax policy. For the first time in six years, tightening our belts as representatives, we give the people a fair chance. That is the nature of our tax policy. Thank you.