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| Crackdown
on traders, tax dodgers Despite the government’s budget proposals for the year 2003 offering very little relief to the general public, Minister Gunawardena told the Sunday Times FT in an interview that the hardships experienced by the people would be over in 300 days, once the economic recovery gathers steam, provided that the current peace efforts continue and America does not launch a war against Iraq. Minister Gunawardena, responding to a question on how the government aimed to tackle the issue of traders failing to pass on the benefits of VAT to the consumers, said that a special amendment was to be made to the consumer protection law granting more powers to the Internal Trade Commissioner, to arrest such unlawful traders. The Value Added Tax, introduced in the maiden budget of the United National Front government, came into effect on August 1, and replaced the Goods and Services Tax (GST) and National Security Levy (NSL). A range of goods,
including agricultural products, was exempt from the new tax, but
traders have failed to pass on the benefits of such exemptions to
consumers. The Finance Ministry has said that its talks with the
business and trade chambers to get traders to pass on the benefits
of the new tax regime had not been successful and that the government
was therefore considering legal measures to get them to do so. Gunawardena said that the government’s policy in liberalising the market and promoting competition was an example of its commitment to grant benefits to the market. “We have removed the previous monopolies held by Shell and the Ceylon Petroleum Corporation. Increased competition will ensure that prices do not unnecessarily escalate.” Minister Gunawardena, speaking on the success of the tax amnesty offered by this government, said that the progress was good, but slow. He said that a special provision is to be made shortly to the Inland Revenue Act, establishing a special unit to crack down on all tax evaders before the stipulated period ending July 31, 2003, in order to make use of this opportunity to get them to declare their assets. Gunawardena also said that despite bankers having met Finance Minister K.N. Choksy and discussed at length the possible implications of imposing 10 percent VAT on banks from January 2003, some of the proposals put forward by the banks were not practical. He said that a decision to abolish such a proposal would be taken up shortly, until which time the proposal would remain in effect. The Minister said that after the country experienced its worst economic year in history in which the country experienced a negative economic growth last year, a Treasury overdraft of Rs 51 billion and a situation in which loan installments exceeded the government’s total revenue, the government was compelled to adopt stringent financial management principles. “We are aware that people are scolding us, but not everyone understands the reality, because the country has not experienced a financial crisis. Any increments would have to be with an increase in taxes,” Gunawardena explained. The government has now laid the foundation for proper fiscal management and could safely assure the public that in 300 days, lending rates would reduce to a single digit, the cost of living would decline, salaries and increments would be increased, two million jobs would be created, investment and new business opportunities would be created and the struggling industrial sector would be given a boost, he said. “Please be patient and you will be rewarded,” he said. The Minister said that the implications of a Gulf war would undoubtedly cripple the Sri Lankan economy due to its heavy dependence on imports. “An increase in global oil prices would fuel an increase in the cost of living,” he said. “We would also lose considerable revenue if our exports decline and our migrant workers could lose their jobs resulting in a considerable loss in foreign exchange earnings to the country.” The Minister said that most Asian countries including Singapore would be severely affected and there was nothing that the country could do to curb the impact of such a war. SEC
silent on insider dealing probe This second opinion, given by a two-member panel which reviewed the SEC’s investigation into the sale of Aitken Spence shares earlier this year, has now been reportedly referred back to the AG’s Department. AG’s Department officials said they were unaware of the report. The SEC’s acting chairman Nihal Jinasena was not available for comment. SEC director general Dr. Dayanath Jayasuriya would only say: “My lips are sealed.” He refused to say why he and other SEC officials had been gagged. The report on the alleged ‘inside dealing’ issue attributed to three ex-directors of Aitken Spence and Co., was tabled at a special meeting of the SEC two weeks ago. Ceylon
tea bypasses auctions “As more
and more producers look to sell privately and direct in order to
improve their cash flow, this in turn will reduce the demand at
the auction and consequently, the prices, which will affect the
producers across the board.” The High Grown teas had a poor second quarter as in previous years but enjoyed very good price levels in September and October. “Unfortunately, November was less than satisfactory, and compares poorly with the corresponding month of last year particularly, as the last two months of 2001 witnessed very strong marketing conditions,” John Keells said. Low Growns have had a very good year in terms of the rupee auction averages, and until end of October the average of each month was appreciably higher than 2001. Prices towards the middle of the year reflected a significant drop and the average, which stood at Rs. 171.76 in March fell to Rs. 151.86 in July. “A Rs.
20 drop in four months is quite significant but the High Grown average
declined nearly Rs. 35 during this period,” the brokers said.
The profitability of tea factories were once again hurt by the rush
crops and poor quality in the second quarter. |
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