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Last Updated: Friday, 17 June, 2005, 11:30 GMT 12:30 UK
Oxfam pays $1m tsunami aid duty
Oxfam aid bound for Sri Lanka
Oxfam says it abides by the laws of the countries it works in
British charity Oxfam has had to pay the Sri Lankan government $1m in import duty for vehicles used in tsunami reconstruction work.

Paperwork had kept the 25 four-wheel drive vehicles idle in the capital, Colombo, for a month.

The Sri Lankan government told the BBC News website the aid had been duty-free until the end of April but was now needed to prevent "market distortions".

Nearly 31,000 people died in Sri Lanka when the tsunami struck on 26 December.

Half a million were made homeless.

Bad roads

Oxfam told BBC News the 25 Indian-made Mahindra vehicles were essential in ensuring it could reach the poorest communities over rough terrain and bad roads.

Sri Lanka does not manufacture any automobiles so it was not possible to buy them locally
Oxfam spokesman

A spokesman said: "Clearly Oxfam would have preferred not to pay this tax on the vehicles and we did everything we could to have the tax waived.

"However the government has turned down our request and the laws of the country dictate that we must now pay the normal import tax."

The spokesman said the incident would not affect the way Oxfam worked in Sri Lanka.

Britain's Daily Telegraph said Sri Lankan customs had charged $5,000 a day while the vehicles were processed.

Oxfam was given the choice of handing over the vehicles to the government, re-exporting them or paying the 300% import tax.

'Case-by-case'

Sri Lankan presidential spokesman, Harim Peiris, told the BBC that he could not comment on the individual case of Oxfam, but said that duties had been waived for the first four months after the tsunami.

Hambantota after the tsunami struck
Much of the Sri Lankan coast was devastated by the tsunami

Mr Peiris, who has a senior role in the government's tsunami relief effort, said that for the "medium-term reconstruction period" the finance ministry had decided the duty system had to be reintroduced.

He said this was in order to promote local procurement and prevent market distortions.

The Oxfam spokesman said the Indian vehicles were chosen because "Sri Lanka does not manufacture any automobiles so it was not possible to buy them locally".

Mr Peiris said duty waivers were still considered on a case-by-case basis, but that Oxfam had on this issue received an "unfavourable decision".

He said the delay was probably caused by "an evaluation and appeal process that takes time".

Some aid workers have expressed anger that reconstruction is being slowed by red tape and inefficiency.

But Mr Peiris said the government believed the relief and reconstruction programme was proceeding to "acceptable international standards".


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