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| Sunday, 13 July 2003 |
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Mixed response for opinion survey on 2002 budget by Elmo Leonard The private sector opinion survey of the effective implementation of the UNF Government's 2002 budget by the Ceylon Chamber of Commerce (CCC) has brought a mixed response with all agreeing that the Value Added Tax (VAT) has had a negative impact on the private sector. CCC, backed by its economic unit, has computed the opinion of the private sector up to May, a CCC spokesperson said. Other comments of interest, disclosed to Sunday Observer, are given below. The honour taxpayer scheme, for those who meet tax commitments with good citizen recognition cards, has not yet been implemented, the private sector has commented. It is expected to be implemented under the Revenue Authority. The private sector is not happy with the reduction of import duty from 40 to 20 per cent from April 2002, objecting that the remaining 20 per cent surcharge has been deferred for next year due to revenue constraints, the spokesperson said. Protection for main agricultural goods, at 60 per cent for rice, chillies, onions, potatoes and edible oil is effective and has a positive bearing on the economy, but its effectiveness needs to be tracked. There is a positive response for the reduction of import duties in line with the Indo-Lanka Free Trade Agreement. The private sector's comments on the reduction of duties on selected raw materials is negative as the government increased tariffs on several of the duty-free items last November. There is approval for the reduction of the import of second hand vehicles for commercial use and new excise measures on beer and hard liquor. Tax concessions for large infrastructure projects in the power sector extending through the Inland Revenue Act; the law has been made effective, the private sector comments. There is displeasure that the current electricity tariffs in Sri Lanka are among the highest in the region. It has a significant impact on the competitiveness of industry and steps to increase long-term supply are yet to be implemented. Petroleum: Bunkering has been privatised. The Indian Oil Company is already in operation and a third player is expected soon. So far, these measures have had a neutral impact on the private sector and the national economy. Tax slabs revised upward, raising the exemption threshold, has raised the disposable income in the middle wage earning group. The double value of tax exemption threshold for retiring benefits has met with similar sentiments. The tax on dividends restricted to 10 per cent would promote capital market development, the CCC spokesperson commented. The private sector is glum on the proposal for rationalisation and providing a level playing field for tax regimes for BoI and non-BoI companies; and awaits the restructuring of the Board of Investment to ascertain the final outcome. On the issue of the exemption of fabric from GST to permit free flow of fabric from factory to factory or zone to zone - the private sector says the non-BoI sector has some unresolved issues and they are not satisfied. The quality payment incentives for housing and reduced corporate tax for specialised housing banks now reclassified as a priority sector, has been praised by the private sector. In view of the downturn in economic activity in 2001/02, this might spur growth and employment. The establishment of a national youth corp to train educated youth in self-employment avenues, has thus far not had a bearing on the national economy, the spokesperson said. Providing seed capital in the form of infrastructure and technical support for a cluster of private sector enterprises to accelerate rural industrialisation has so far not been implemented. They are happy about the increase in duty-free allowance for migrant workers. The flat fee of Rs 25 for duty-free garments sold locally by BoI enterprises has had a neutral impact on the national economy. |
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