Financial Times

Provincial BTT increase on hold
By Dinushika Dissanayake
The controversial Business Turnover Tax by provincial councils opposed by businessmen took a new twist last week with a presidential directive that the tax should not be imposed in six provinces including the west.

Nawaz Rajabdeen, FCCISL President, said though the tax had been gazetted and passed by some other provincial councils, it is unlikely to be implemented due to the presidential order.

The bill wasn't taken up as planned last week by the Western Provincial Council for approval because of this new development. "The increase in the provincial council tax from one percent to five percent, which had already been gazetted, appears not to have been implemented," said Deva Rodrigo, Chairman of the Chamber of Commerce.

He told The Sunday Times FT that he learnt the Finance Ministry of Finance had also had some role in convincing the provincial councils on withholding the implementation of the tax increase. "We understand that these factors have persuaded the provincial councils to postpone or re-look at the increase in tax," he said.

Rodrigo said that key businesses had also not responded to the tax which was proposed to be implemented with none of the liquor and tobacco manufacturers adjusting their prices to accommodate the impending tax.

"If leaders in the industry have taken a huge business decision not to increase their prices, we can be reasonably certain that the tax will not be implemented," he said.

Hasitha Premaratne, Head of Research at HNB Stock Brokers, said the tax would have a serous impact on inflation had it been implemented. "Inflation will be sharply affected," he said, adding that with the rise in oil prices in the world market the inflation rate would soon be under a lot of pressure with local oil prices undergoing revision.

He said a reason for the introduction of the tax may have been the reduction of funding for provincial councils in the government budget last November.

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