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Sri Lanka to tax car crashes in drastic austerity budget, raising money and ‘reducing accidents’

  • Economy shrank a record 3.6 per cent last year and faces foreign exchange crisis, the worst since free economy began in 1978
  • Nation’s roads among world’s most dangerous with around 3,000 fatalities and 25,000 seriously injured each year

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Sri Lankan soldiers receive their booster dose against Covid-19 at a military hospital in Colombo. The nation’s economy shrank a record 3.6 per cent in 2020 because of the pandemic. Now the government has announced a tax on car accidents to help claw some money back. Photo: EPA-EFE

Sri Lanka has slapped a tax on road accidents in a drastic austerity budget as the country faces a major foreign exchange crisis.

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“It is proposed to impose a fee on vehicles meeting with accidents,” Finance Minister Basil Rajapaksa told parliament on Friday. “Through this initiative, it is expected to reduce the number of motor vehicle accidents.”

Rajapaksa said accidents would be taxed under new proposals to keep the budget deficit at 8.8 per cent of GDP in 2022, down from 11.1 per cent this year. He did not give details of the crash tax.

Sri Lanka’s roads are among the most dangerous in the world with over 3,000 traffic fatalities and some 25,000 seriously injured every year.
Trade union activists on November 12 in a protest demanding a pay rise before finance Minister Basil Rajapaksa presented a drastic austerity budget. Photo: dpa
Trade union activists on November 12 in a protest demanding a pay rise before finance Minister Basil Rajapaksa presented a drastic austerity budget. Photo: dpa
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Rajapaksa said the country was facing a serious crisis with foreign reserves at US$2.3 billion, down from US$7.5 billion when his brother Gotabaya took over as president two years ago.

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