15% tax on gold imports dulls jewellery industry

Sri Lanka’s jewellery industry, which is currently of international standard, is in danger of going back to being a cottage industry, due to the Government’s decision to impose a 15% tax on gold imports, the Sri Lanka Gem & Jewellery Association (SLGJA) warned.

SLGJA Vice Chairman Selvakumar Kandasamy told the Sunday Times that the Jewellery industry in Sri Lanka, which started off as a cottage industry, had reached a very good market but, in light of the 15% tax, the industry could well go backwards.

“The SLGJA has 300 members manufacturing, selling and exporting, but the industry has slowed down due to the new tax,” Mr Kandasamy stated. "All commercial banks too, which profited mainly through the pawning business, have also suffered, as even this has now declined," he further added. "It is traditional in this country for people to invest in gold, when they have surplus funds, to gift the future generation," claimed Mr Kandasamy.

"Prior to imposing the tax, the Government should have had a dialogue with those involved in the industry," Mr Kandasamy remarked. Nevertheless, he acknowledged the Government has every right to take a decision on financial matters.

“Those involved in the gold industry are high stakeholders in the country’s economy, but with the new tax, we now have to think twice before investing further in the industry, because our overheads are very high, unlike other businesses," Mr Kandasamy added. He said their Association was now in the process of making a new proposal to the Government, to consider their grievances.

Conceding there was a problem regarding gold being smuggled into the country, Mr Kandasamy, however, pointed out that the Government should have a proper monitoring system to address gold smuggling.