Tea exporters hail cess reduction

The Tea Exporters Association (TEA) commended the move by the Government to reduce the recently imposed cess on tea exports.

The Association welcomed the move which is vital for tea exports to be competitive and enhance its market share. Sri Lanka's tea exports have been uncompetitive due to the high cost of production and low exports of branded tea. TEA, Chairman Rohan Fernando said that tea exporters would have incurred huge losses had the new cess on bulk tea exports been imposed. The new cess would have undermined Sri Lanka's credibility as a reliable supplier of tea to the global market.

TEA also pointed out the practical difficulties in implementing a tax adjusted every week based on a percentage of price averages at the Colombo Tea auction.

The appeal by TEA to the Plantation Industries Minister Mahinda Samarasinghe received an immediate response and an amicable solution was arrived at by deferring the effective date of the cess to March 1 while revising the cess to Rs. 10 per kg or 2.5 percent (as opposed to five percent) of the Colombo Auction average whichever is higher. The cess will be revised on a quarterly basis taking into account the average auction price for the preceding three months.The Planters' Association also welcomed the move to reduce the tax on tea exports as it would have made Sri Lankan tea exports less competitive. The industry stakeholders opposed the move to almost double the tax on bulk tea exports without adequate consultation.

Sri Lanka's global tea export share had declined due to competition from Kenya, China and Vietnam. Sri Lanka was the leading exporter of tea in the mid-1990s with 23 percent of the global exports. Sri Lanka's tea export volume ranged from 300-350 million kgs a year.

The Sri Lanka Tea Board targets an export revenue of US$ 2.1 billion under a medium-term plan. Exporters are confident that tea export revenue would touch the $ 1.5 billion mark this year.

LF