The government eventually withheld the implementation of all the increased taxes, except those that were imposed on vehicles. The taxes on vehicles were also lifted after the Supreme Court declared them to be unlawful.
This year, the government has submitted the Tax Revision Bill 2011 to the National Assembly along with their budget proposal. The Bill seeks to increase taxes according to the procedure outlined in the Constitution, the Public Finance Act and the orders of the Supreme Court.
Here are some features of the Tax Revision Bill that may interest you:
Taxes on vehicles. The increase in taxes proposed for vehicles is way below what the government tried to implement last year. Cars that have engine capacities of under 1.5L will be subject to 20% sales tax and 20% customs duty. Cars having engines between 1.5L and 2.5L will be subject to 20% sales tax and 25% customs duty. And cars that carry engines bigger than 2.5L will be subject to 20% sales tax and 30% customs duty.
Vehicles imported from India are exempt from customs duties. And vehicles that were ordered before the Bill was introduced will pay taxes at earlier rates.
Electrical and hybrid vehicles will not be taxed at all. So expect a surge in the number of hybrid vehicles within a few years. Bicycles are also fully tax exempt. That will come as good news to people wishing to bike to work or for pleasure.
Taxes on alcohol. Excise on domestically produced spirits have been increased only slightly, from 20-60% to 30-75%. Higher excise rates will be applied to cheaper alcohol, while the lower rates will be applied to more expensive brands.
The sales tax on imported spirits and wines has doubled to 100%, while customs duty on imported spirits and wines remains the same at 100%.
Beer will now be subject to 100% sales tax (up from 50%). And another 100% in customs duty will be charged on imported beer.
Packaged juices. The sales tax on all fruit juices packaged in containers below 250ml will be doubled to 30%.
Spare parts. The customs duties and sales taxes on a wide range of spare parts have been increased. But for some reason, customs duties on spares for certain boilers, generators, turbines and pumps have been reduced drastically.