A timely move

Fuel prices are up again. Motorists are feeling the pinch, but it is an inevitable fact of life in these times. A price rise was a foregone conclusion in the face of a steep escalation of crude oil prices in the world market.

Amidst this somewhat gloomy scenario, one news item gives us hope that the authorities are taking an enlightened, positive approach to the issue.

Environment Minister Patali Champika Ranawaka has proposed that duty concessions be granted to hybrid (gasoline/electric) and all-electric vehicles as an immediate measure. We are told that the Cabinet has endorsed his proposal.

This is indeed a groundbreaking decision that was long overdue. We applaud the Environment Minister for taking this measure, in line with the rest of the world. The Daily News has persistently campaigned for duty cuts on hybrid and electric vehicles. Motor traders too had urged the Government to take this progressive step.

Indeed, the rest of the world has overtaken us in this regard. Many developed and developing countries, aware of the need to cut down on fuel consumption and noxious emissions, grant either duty-free or concessionary duty structures for cars such as the best-selling Toyota Prius. Many countries exempt all-electric cars from all duties and taxes and even parking fees.

The Minister has also called for more facilities for local assemblers of motor vehicles. This is also a step in the right direction. They should be encouraged to manufacture more environment-friendly vehicles.

Hybrids and electric are not fancy products that are still in the ‘future’. They are widely available now and the technology is improving all the time. Tomorrow’s hybrids will be cleaner and more fuel efficient.

Car companies and specialist battery manufacturers are working on new batteries that will give a longer range with lower recharging times. A slew of new electric cars will come to the market in the next few years.

Moreover, hydrogen/fuel cell powered cars are likely to enter the market in the next decade. These cars, which emit water as the only by-product, will be extremely environmentally friendly and authorities should keep an eye on the latest developments.

The authorities must also take this opportunity to rethink the entire duty structure applicable to passenger motor vehicles, especially diesels. Diesel passenger cars attract a duties and taxes upto 500 per cent of the car’s value. The idea is no doubt to prevent private users from enjoying the subsidy meant for transport providers.

But this thinking lacks any rationality in the face of rising oil prices and current diesel technology. Litre per litre, today’s advanced diesel engines are far more efficient and frugal than their petrol counterparts.

In other words, diesel cars do more kilometres per litre than their petrol counterparts, whatever the engine size. More than 75 per cent of new cars registered in Europe (where petrol and diesel prices are more or less equal) are diesels. Even in neighbouring India, there is only a slight variation in prices between petrol and diesel powered cars.

Several countries are also taxing cars based on their carbon dioxide emissions, not engine sizes. Lower CO2 emissions attract lower duties. In fact, some of the bigger engines are less polluting than smaller ones.

A more logical diesel duty structure will lead to a higher number of diesels on our roads, which could mean a huge saving in terms of foreign exchange in the long run.

The authorities should also rethink the existing policy on reconditioned cars. Reconditioned and brand new cars are taxed more or less at the same rates.

Reconditioned vehicles have been used either in Japan or Singapore for upto three years and then dumped here. Often, these vehicles have failed to pass tough emissions and mechanical tests in the country of first registration. They often come with second hand parts.

Raising taxes on reconditioned vehicles (or still better, banning their import altogether) and lowering taxes on brand new vehicles is a far healthier option. A lot of foreign exchange can thus be saved on importing second hand cars and second hand spare parts.

Another sore issue the issue of duty free permits. While our People’s Representatives can buy, say, a brand new Toyota Prado for just Rs.3.5 million, others have to pay a staggering 15 million rupees for the same car.

Granting car permits to public servants was a step in the right direction, but we see no reason why the scheme cannot be applied to expatriate workers who bring in more than US$ 3 billion a year, depending on the number of years they have worked abroad.

Finally, if Sri Lanka had good transport links such as subways, fast trains, clean, uncrowded buses, many would prefer to use them instead of fuel-guzzling vehicles. A good public transport system will be the ultimate fuel saver.