Harsha slams low and unsystematic Govt. tariffs

By Ashwin Hemmathagama

Our Lobby Correspondent

Low and unsystematically introduced tax tariffs on selected sectors are losing the Government millions of rupees in revenue but taxes for essential goods remain unjustifiably high, charged UNP MP Dr. Harsha De Silva in Parliament yesterday.  

He insisted that the Government has failed to generate the necessary revenues to propel the economy as predicted and the revenue target, which stood at 23%, has declined to 11%.

“James Packer is now putting up a 36-storey casino in Colombo Fort area. He will be subjected to 5% tax, when the casino industry taxing stands at 39% around the world including Macau. Such low tax rates fail us to collect money necessary for economic development. According to the CBSL Annual Report, most taxes are imposed on the general public. The tax disparity is high and many are tax evading. Some who earn an income of Rs. 10 million from the stock market pay nothing as tax but an ordinary person pays Rs. 85 as tax for a tin of canned fish,” explained Dr. de Silva, joining the debate when the Government moved three Gazette notifications amending the Agrarian Development Act, Import and Export (Control) Act and regulations under the Motor Traffic Act.

Minister of International Monetary Co-operation and Deputy Minister of Finance and Planning Dr. Sarath Amunugama moving the amendments said: “Pelwatte and Sevanagala production went up in March 2013 and we have controlled the ethanol imports. However, ethyl used for paint industry and high concentrated ethanol used for experiments are not produced here in Sri Lanka. We got to know that after controlling the imports. We will be allowing the import of the ethanol types, which are not produced locally and quantities are difficult to meet in Sri Lanka. The permit issued by the Excise Department will allow imports in approved quantities and to meet special purposes.”

However, Dr. de Silva who disagreed with the relief given on ethanol, noted: “I highlighted the illegally imported 62,000 litres of ethanol in this house in February this year. According to Government estimates Rs. 110 million worth of ethyl were there. But ultimately the address given in the import documents turned up bogus. So the Government lost Rs. 400 per litre as tax from this ethanol stock. Now the Government is giving permits to import high concentrate ethanol sighting the requirements for paint and other technical industries. The recently confiscated 62,000 litre were 87% concentrated, which is the highest possible percentage. But in March this year Minister was confident that local production of ethanol is adequate to meet the demand in Sri Lanka. But almost after two months you are changing the stance. One thing is clear, either the Government didn’t reveal the truth in the ethanol import scam or there is a high use of alcohol consumption in Sri Lanka subjected to a significant increase recently. In 2004 the 34.5 million litres of arrack were produced here. In 2011 this was increased to 53 million litres. In 2011 there were 2,869 bar licenses operating in Sri Lanka. Except the moon shine, 86.3 litres millions of arrack was used in Sri Lanka. With the addition of the foreign liquor, this was increased to 102 million litres. So the per capita usage stands at 11 litres per adult male per annum.”

He went on to note: “Some say that vegetables are thrown away or price is high, which keeps away the consumer. If you check there is high fluctuation in the prices of pumpkin and tomatoes at Dambulla market. This Government is not capable of solving this issue, which is supply and demand related. We have seen the high yield being thrown out to feed elephants. If you take the potatoes, the Nuwara Eliya growth is sold at an average of Rs. 65. This is not justifiable and creates a loss. The pricing should be Rs. 85. There is plan to import 200 vehicles for the CHOGM. In custom there is a temporary way of getting vehicles provided that the same vehicles are taken out of the island within a period of three months. According to The Sunday Times, the 10 motorcycles imported for the recent races are still in the island, which is a tax evasion. So under such situations how do we increase the tax income? High power 1,000cc motor cycles are now allowed. The gazette was issued after the respective motorcycles were received at Port of Colombo.”