NCCSL welcomes streamlining of tax administration
 

by Irangika Range

Eventhough the budget was presented at a time leading up to the Presidential election, overall it cannot be considered as an election budget and the National Chamber of Commerce of Sri Lanka (NCCSL) is happy that the pre-budget consultative process has received due attention in the formulation of the budget President of NCCSL Nirmali Samaratunga said.

Samaratunga said that the Chamber welcomes the specific and strong alignment with Millennium Development goals, which will help the country to reduce its level of poverty.

'We see as positive the incentive provided for investment in less developed provinces. However, the practicality of implementation will need to be demonstrated.

It is also a positive factor that there is a focus on selected industry and service sectors to provide support. However, we see as negative the imposition of higher taxes and levies, the introduction of stamp duty, which is a policy reversal and the higher VAT on financial services which will result in further increases in financial intermediation costs passed on to the customer of financial institution.

The reduction of taxation on SMEs is particularly welcome by the NCCSL in view of its strong links with this sector. We commend the proposals to streamline the tax administration as it will broad base the tax net and reduce the inconvenience to genuine taxpayers while increasing collections.

The NCCSL notes that the budget is silent on many liberalisation issues that are essential for private sector development. It is hoped that these initiatives will continue.

"We are happy to note that the several proposals submitted by the NCCSL, and following representations have been included in the national budget proposals and we must recognise the emphasis, placed on the consultancy process by the government in the preparation of the Budget.

The Chamber apart from its submissions was active on the several National Council for Economic Development (NCED) clusters such as trade and tariff, export, SME and capital market clusters. With regard to the NCCSL recommendation and representation made, some proposals have been included in the 2005 budget.

On a macro level attention was focused on infrastructure development such as power supply and transport which has been addressed in the budget.

Incentives are granted for industries to move away from western region. In the case of the printing industry, our request for removal of duty has been accepted with a duty waiver on paper and paperboards.

Similarly on the packaging industry, attention was focused on the reduction of import duty to 6 percent for importation of cans which is a welcome development which will help the industry.

We are happy to note in the area of agriculture particularly in the organic agriculture which is a specialised focus area of the Chamber, our proposal regarding assistance of certification and organic standards and the setting up of a certification body has been proposed.

Reduction of VAT refund period from 30 days to 15 days would also benefit entrepreneurs. Reduction of income tax to 15 percent for the shipping industry and exempting ships registered under Sri Lanka from VAT has been included.