CESS TAX ON TEA JEOPARDISES NFTSH LIVELIHOODS

The National Federation of Tea Small Holders (NFTSH) yesterday claimed their livelihoods were in jeopardy because of the cess tax on tea exports that had been increased by 22%.

The National Organiser of the NFTSH, Lala Premanath said though the Ministry of Plantations had issued a statement noting there would be a revision in the cess tax which was increased on January 23, 2013, it was still not confirmed through a gazette notification.

“The gazette notification which increased the cess tax was signed by Minister Rishad Bathiudeen and it was the Minister of Plantations, Mahinda Samarasinghe who said there would be a revision. We will only be convinced if there is new gazette notification issued on behalf of the revision of the cess tax,” Premanath said.

He further said that the majority of the tea small holders were currently facing difficulties to get their produce into tea factories as the absence of good quality fertilizer and the inconsistency of the distribution of the fertilizer subsidy had increased the cost of production.

In this backdrop, when the cess tax was increased by 22%, the tea small hold- ers’ profit margin would be decreased as ultimately the tea exporters would have to cover their increased export costs.

“When the finished product is sold to tea exporters the profit margin is divided between the tea small holders and the factory owners. The factory owners get 32% and the tea small holders get 68% per cent. But when export costs increase this profit margin decreases. Also due to the increased costs there will be tight competition and if the market demand for Sri Lankan tea falls, it will directly impact on us making it difficult for the tea small holders to sell the raw tea leaves to factories,” he pointed out.

The NFTSH blamed the government for the current quandary they were in, and claimed that it was the service oriented economic policy that had impacted the production based industries such as the tea industry to fall into such a dire state.

“The government is not interested in developing the tea industry. Earlier the finances collected from the cess tax were deposited into the account of the Sri Lanka Tea Board. But now the finances are taken by the Treasury. Due to this procedure the Tea Research institute does not have enough finances to educate tea small holders about yielding good crops. The Tea Board does not have enough capital to develop the industry” said. Premanath.

The NFTSH said that though they requested the Minister of Plantations to grant them an opportunity to discuss their grievances there had been no response from the Ministry so far.

“We are trying our best to solve the issues we have through discussions. But the ministry did not even acknowledge our letter. If we are ignored in this manner we will be forced to take to the streets because about 15% of the population is directly or indirectly dependent upon this industry,” he said.

The gazette notification which increased the cess tax was signed by Minister Rishad Bathiudeen and it was the Minister of Plantations, Mahinda Samarasinghe who said there would be a revision. We will only be convinced if there is a new gazette notification issued on behalf of the revision of the cess tax