The price of a tax slashed permit for an standard family sized car had fallen from about 1.5 million rupees to about 800,000, according to participants in the market.
Since the mid 1980s Sri Lanka has given completely tax free cars to elected rulers and tax slashed cars to state workers while taxing ordinary citizens to very high levels, in a perversion of just rule of law.
Many state workers then sell the 'permits' to others such as businessmen, arbitraging the difference between the tax paid and tax slashed car through an active grey secondary market.
On paper, state workers cannot 'sell' the car for three years as the motor vehicle registry do not entertain transfers of ownership, but people buy them on an understanding.
Last month Sri Lanka's rulers suddenly said state workers could sell the cars legally.
But permit holders say a 500,000 rupee fee has to be paid to change the first owner.
"There is also a greater supply of permits now that honest state workers who were reluct