Some ‘good’, some ‘not good’, says National Chamber on interim budget concessions

Sri Lanka’s National Chamber of Commerce has welcomed the concessions provided in last week’s interim budget but has cautioned against inflationary trends that could emerge from these decisions.

“We are of the view that measures taken to enhance the quality of the life of the people will induce somewhat subdued consumption pattern of the people. However, we raise a word of caution similar to the previous budget concluded last October 2014 as well, with regard to inflationary trends that can emerge if there is an uninterrupted flow of imports coming down to the economy with improvement of disposable income of the people through reduction of prices and increase of salaries. Further, careful management of currency stability at this juncture also is of paramount importance, in our view,” it said in a statement on Monday.

The chamber said various one off levies such as a 25 per cent one off tax on profits from companies and individuals 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, etc immensely supported to maintain the budget deficit at the expected 4.4 per cent level of the GDP.

But it noted that, “we would like to raise our concerns regarding the sustainability of the government revenue streams in the future in the absence of one off levies mentioned”.

It urged the Government to outline a broad policy framework at this juncture where there is consensus among major political parties on various policy matters. “We hope such consensus on broad policy matters would strengthen the consistent policy framework and investor confidence at this crucial juncture where the country is in dire need of FDIs,” it said.

Welcoming the concessions offered to citizens in the form of reduction of special commodity levies, reduction and removal of certain custom duties on essential food items, reduction of petrol, diesel, kerosene and LP gas prices, reduction of retail prices of milk powder, and bread, etc, it said this will improve the quality of life of the citizens across the board.

“We believe that income tax concessions offered for the profits from projects through investments in lagging regions, vegetable and food processing industry and proposal to introduce new export processing zones under BOI, etc also 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 which extends a helping hand to the SME sector. Further, triple tax deduction on expenses on skills development and training introduced to persons registered with Tertiary Vocational Education Commission also is a positive move and broadly in line with our previous budget proposal of requirements to develop skilled labour of the country,” the statement said.