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Sunday, 8 February 2015

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'Uninterrupted imports may cause inflation'

The National Chamber of Commerce of Sri Lanka welcomed the concessions offered to citizens in the form of reduction of special commodity levies, reduction and removal of certain Customs duties on essential food items, reduction of petrol, diesel, kerosene and LP gas prices, reduction of retail prices of milk powder and bread which will enhance the quality of life of citizens, a media release said.

Increase of PAYE threshold, increase of salaries of the public sector employees and pensions also will increase the purchasing power of the people.

"Measures taken to enhance the quality of life of the people will induce a somewhat subdued consumption pattern on the people. However, we raise a word of caution similar to the previous Budget concluded in October 2014, with regard to inflationary trends that can emerge if there is an uninterrupted flow of imports with improvement in the disposable income of the people through the reduction of prices and increase of salaries.

"Careful management of currency stability at this juncture is of paramount importance. Various one-off levies such as a 25% one-off tax on profits from companies and people who have earned profits over Rs. 2,000 million in the tax year 2013-14, special levy of Rs. 1,000 million on casinos, Rs. 1,000 million levy on satellite operators and levy of Rs. 250 million on licensed mobile operators immensely supported to maintain the budget deficit at the expected 4.4% level of the GDP.

"We would like to raise our concerns regarding the sustainability of government revenue streams in the future in the absence of one-off levies.

"We believe that income tax concessions offered for the profits from projects through investments in lagging regions, vegetable and food processing industry and the proposal to introduce new export processing zones under the BOI will have a positive impact on the economy.

"We also welcome the introduction of the minimum purchase price for paddy, potatoes, tea leaves, rubber and fresh milk," the release said.

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