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| Sunday, 28 November 2004 |
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CCC commends revenue proposals The Ceylon Chamber of Commerce welcomes the revenue proposals announced by the Minister of Finance. The Ceylon Chamber is pleased that a number of the recommendations made by it and in particular those relating to extending the tax net, recognition of compliant taxpayers, appointment of a Tax Ombudsman and a consultative process in developing tax legislation have all been accepted. It is noted that the Finance Minister's emphasis on containing the budget deficit is aimed at increasing revenue rather than curtailing expenditure. Whilst the budget proposals and the estimates reflect this, the real challenge will be to raise revenue, which is less within the government's purview to control than expenditure. The proposals to contain the budget deficit at 7.6% should lead to fiscal consolidation and low inflation. The projected growth rate of 6% will have a further positive impact on generating employment. However, with volatile international oil prices and Sri Lanka's heavy dependence on thermal power generation, the narrowing of the trade deficit and reversing the present balance of payments deficit will be the most pressing challenges ahead. Failure to objectively address these challenges will result in inflation, which would negate the positive features of this Budget. In this context, the Ceylon Chamber of Commerce would like to make the following observations on certain specific Budget proposals; Positive Features SME Sector: The notable features relating to the SME sector are: * The incentives for advanced technology Export Development The proposals to stimulate the export sector, which includes the Export Development Incentives Scheme, reduction in the Port and Airport levy for exports, incentives for small exporters, the focus on Floriculture and value added cinnamon, are welcome by exporters and could be expected to contribute to the reduction in the trade deficit to some extent. The apparel sector has endorsed the proposed removal of the Value Added Tax on imported inputs and the other proposals made to advance the industry. Medium Scale plantations Since land vested with the JEDB and SPC are unproductive and unprofitable, the proposal to dispose of it in plots of 50 acres or less is rational. Housing for Migrant Workers Migrant workers, who make a significant contribution to the country's economy, would be afforded the opportunity to improve their quality of life, through the proposed housing loan scheme. This would additionally provide a fillip to construction activity. Alternative Energy Development The proposal to pay US$ 0.6 cents per unit for small-scale power producers is in harmony with proposals made by this Chamber. - VAT The adjustment of VAT rates is also welcome. The relief granted to the depressed segments by reducing VAT to 5% on essential commodities, is a step in the right direction. |
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