CNCI hails 2011 budget

by Gamini WARUSHAMANA

The Ceylon National Chamber of Industries (CNCI) said that the 2011 Budget emanates a message towards accelerated economic development with emphasis on continued infrastructure development, domestic production and tourism.

The Chairman of the CNCI, Sunil Liyanage said that the move towards reducing the budget deficit to low levels provides a conducive environment for businesses. Steps taken towards simplification of taxes are a request from the business community and CNCI stressed this in its submissions to the Presidential Tax Commission.

Sunil Liyanage

What is required at the beginning of a new chapter in the economic development of the country is a firm assurance from the Government that this will be the direction in which the Government will move in the years to come and the investors could confidently make long term investments, Liyanage said.

A series of changes in the field of taxation such as removal of Turnover Tax, SRL and Debit Tax, removal of the 85% limitation of the input VAT set off, reduction of NBT to 2%, accelerated capital allowance on machinery to 331/3, double deduction on R & D, reduction of Income tax to 28 % and for exporters to 12 % will create a positive impact on the economy.

We also welcome further relief given to SMEs. However, we are concerned about the proposal to increase the electricity tariff by 8 percent. Prevailing tariff is uncompetitive and to increase it by 8 percent, to make the CEB profitable is going to affect the viability of so many manufacturers especially high energy consumers such as porcelain, tiles and plastics, Liyanage said.

CNCI said that the tariff for the manufacturing sector should be on par with that of other competing countries.

Commenting on the proposed private sector pension scheme Liyanage said “It is our understanding that the scheme has looked into long term viability. However, there are some concerns among the employees and the businesses too.

Businesses will not only have to pay out another two percent for the pension scheme but there are proposals to take over the gratuity funds in the businesses which will impact the cash flow of the businesses”.

Another concern that the Chambers have been canvassing is to reduce the work of the businesses by unifying the payment scheme of the EPF and the ETF. CNCI hopes that the introduction of the Pension Scheme will not cause additional work. Thus the proposed pension scheme should be implemented with the agreement of all three stake holders the trade unions, employers and the government.