The issuance of tax free permits for members of Parliament and some senior government officials has been a practice which has had a troubled and unpopular history in Sri Lanka. In the past, the permits have often been used to purchase high value luxury gas-guzzling vehicles by members of Parliament, who have also used to ‘sell’ the permit to the highest bidder to convert it into a tax free cash cheque.  This practice has raised concerns about the ethical implications and financial impacts of such privileges, also has long drawn public scrutiny and has been criticized as a self-rewarding mechanism created by law makers, for lawmakers at the taxpayers' expense. In 2023, 116 Members of Parliament (MPs) reportedly requested the government to issue duty-free vehicle permits. This proposal was on the president's desk for a while and if approved, would make these MPs eligible for tax exemptions amounting to millions on imported vehicles. The privilege of duty-free vehicle import permits is not limited to MPs. Top public servants, some military personnel, and even some university professors also receive duty-free vehicle permits, but their tax-exempt allotment is capped at Rs. 3.6 million. However, for MPs, there was no meaningful upper limit, as the limit is set to allow the import of the highest-end vehicle possible. The permits are transferable, which allows MPs to either sell them to the highest bidder or import vehicles themselves and then sell them at market price, earning substantial profits. In 2010, nearly one-third of the members of parliament (65) had reportedly sold their permits for amounts ranging from Rs. 12 million to Rs. 17 million each (in 2010 Rupee value). Some MPs imported vehicles by themselves and sold them at market price. For instance, a high-end Toyota Prado purchased for Rs. 7 million with a duty-free permit could be sold for Rs. 30 million on the open market at the time. The trend continued, and in 2016, it is reported that approximately 75 MPs imported luxury vehicles, including BMWs, Land Cruisers, Mercedes-Benz, and even GM Hummers, under the duty-free permit scheme. For each vehicle, the tax exemption alone had reportedly cost taxpayers a staggering amount ranging from Rs. 30 million to an - Rs. 44.7 million.

The incumbent government of the National People’s’ Power (NPP) has long criticized the practice. However, they too have opted to use the permit to purchase vehicles for collective use at party level, when they have had members in the parliament before.

Making an appearance on a broadcast television program on Monday (20) Foreign Affairs, Foreign Employment and Tourism Minister Vijitha Herath stated that the Government plans to provide vehicles for all 225 Members of Parliament in the near future. However, he said that Parliamentarians will no longer be granted permits to import vehicles.   “The Government will take steps to ensure that all MPs are provided with vehicles, eliminating the need for individual vehicle import permits” If put into action, and existing vehicles from the government’s extensive fleet, it will be a marked change in Sri Lanka’s political culture and governance style. No government thus far has had the political will to deny MP’s the lucrative incentive which had been a popular target for all who joined the legislature. Given that this step has now been announced, if the government rolls it out effectively in the coming month, the action will go some way to rebuild faith in the legislature and would be sign of improvement in governance.

However, the state owned fleet itself is a matter of concern. Much of the government vehicle’s fleet is outdated, and in need of repair, as such day to day running cost and yearly maintenance is a highly costly matter. One solution which some countries have used to address state owned fleet management and to keep it cost effective is to create a legal framework for an Automotive Leasing and Fleet Management Services. For an example, the Australian example include a national government fleet management policy, which requires procurement officials that the vehicle fleets purchases meet certain base standards, and is fit for purpose. In Australia, the Department of Finance administers the arrangement for motor vehicle fleet management and leasing services to Commonwealth entities (the Arrangement). This include, that non-corporate Commonwealth entities must source their vehicle leasing and fleet management services under the Arrangement, it regulates and ensures that service providers must providing consistent processes, pricing, and services, and improve the cost-effectiveness to the Commonwealth and participating entities. It also ensures that the vehicles provided must have high safety standards, and not be older than three years since manufacture, with clear details and records from the OME. It also regulates how the vehicle should fit for purpose, and some vehicles should be rotated out of fleet services once they reach more than four years of service or a pre-determined mileage, to reduce maintenance and operational cost.

Given that Sri Lanka wants to reduce reoccurring state expenditure, a fleet services model may be one option to consider.