Bank officials hit out at proposed financial sector taxes
Last week the financial institutions that deal with cash transactions said that the proposals for the banking centre in the 2017 Budget will have a negative effect on its customer base with less people using the bank for financial transactions.
Seylan Bank, payment card industry association, Chairman, Jayanath Dias said that the decision to charge Rs. 5 on every Rs.10,000 transacted by people through financial institutions will discourage customers to use banks’ services for all their financial transactions.
He said that the budget will dampen the spirit of saving and conceded that the digital banking will also slow down.
“Digital banking is being promoted among customers and when more people are getting into the fray, the governments action will put them off,” he said.
“More customers are getting used to paying their bills through the internet and the habit will soon die,” he added.
Mr. Dias said there will be a push for the traditional cash transaction. He further said that it is not clear how it has to be charged and banks would have to seek clarification from relevant channels.
Meanwhile a spokesman of another private bank said that the levy would incur significant costs to customers and that the banks will have to introduce mitigatory measures to keep its customer base from dwindling.
He went on to say that although the Government has projected Rs. 8000 million on the Financial Transaction Levy ( FTL) the cost could run up to around Rs.47 billion. “The levy is on every debit and credit transaction in the banks,” he said. "We may even have to absorb a certain portion of the levy,” he added.
Retired senior banker Rusiripala Tennakone said that increasing the withholding tax (WHT) to 5 per cent from the present amount and the removal of exemption on savings account with less than Rs.60,000 a year will hit the common man harder. There will be less incentive to save, he said.
Also granting tax concessions only on interest on deposits upto Rs. 1.5 million a month for senior citizens will deny them of enjoying the 15 per cent interest on deposits the government introduced last year. “It is like giving from one hand and taking away from the other,” he said,
He conceded that the budget has many hidden taxes that will squeeze the common man out. “The government has to re-think its strategy,” he said.