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. - ENDS -