UNP claims abuse of cess funds collected from exports and imports
Thursday, 8 May 2014 00:00
By Ashwin Hemmathagama
Our Lobby Correspondent
Imprudent use of cess, which is added to the consolidated funds of the Government to help fuel the “parasite economic activities,” will “cripple the export industries,” Opposition lawmakers charged yesterday in Parliament, when the orders under the Sri Lanka Export Development Act were moved.
According to UNP MP Eran Wickramaratne, a cess imposed on a particular industry should be used for the betterment of the same industry rather using it for petty projects of the ruling party.
Noting that cess is a special tax used to meet certain economic targets, Wickramaratne pointed out that generally when a cess is imposed, the earnings are spent on the particular industry.
“However, instead of using it on the particular industry, the cess is added to the consolidated funds. In reality, the cess imposed should be used to increase exports. Unfortunately exports are not getting increased. Instead we use it for flowerbeds or to construct Government buildings and to colourwash them. Today we approve a cess on exports. It is useless unless the cess is used to improve the exports.”
Charging that exports are “declining at a rate,” he noted that cess is applied on tea industry exports.
“Although it is not new, it was an unusual move. In 2010, the cess was applied for pepper, cloves, cinnamon and all other spices. Application of a cess discourages the local producers and our exporters. The cess was applied for agricultural products as a punishment for exporting as is rather than with a value addition. This is a wrong move. Since 1975, the Tea Board Act enabled the imposing of the cess on tea. But still we could not exceed the value added tea exports over 33% of total tea exports. Although the cess is levied, the value addition was not developed. There are so many things you could do to develop the tea industry. It can start from distribution of plants, distributing fertiliser, and helping with the sales and brand building. Today we are the single largest cinnamon exporter in the world. This Government promotes a parasite economy,” added MP Wickramaratne.
Opposition lawmaker Dr. Harsha de Silva joining the debate brought the declining rubber exports into the limelight. “According to page 130 of the Central Bank Annual Report, we have exported $ 125.1 million worth of rubber in 2012. This has declined to $ 71.3 million 2013. This is a decline of 43%. Rather than exporting rubber, we import rubber. Rubber estates are almost closed in Warakapola area regardless of size. Small players engaged in the rubber industry have found it difficult to continue the latex purchasing business due to loss making. Unless the Government takes necessary action, we will find it difficult to find the necessary labour to tap the rubber trees,” he said.
“We all know rubber prices are declining and the Government keeps ignoring this phenomenon. There is no easy solution for this. It is true that Loadstar is purchasing our rubber. If Loadstar is importing latex from Thailand at a lesser price, how can we help sustain local planters? I am not blaming Loadstar, which enjoys the highest market share in solid tyres. But a monopoly has led to bringing down the price. The Government is supporting them to import latex at a lower price from Thailand without cess or any other taxes being imposed; we are not amazed,” added Dr. de Silva.
Moving the motion, Minister Athauda Seneviratne stated that cess was increased to support the exports and to promote local industries. “Plates, sheets, film, foil and strips of plastics, non-cellular and not reinforced, laminated, supported or similarly combined with other materials, film of a thickness not exceeding 0.30mm and certified by Secretary, Ministry of Health as having been imported for packaging of pharmaceuticals are exempted from cess. However, wadding of textile materials and articles thereof; textile fibres not exceeding five mm in length (flock), textile dust and mill neps will have a cess.”
With the new law in place, wet cleaning tissues, manmade fibres, sanitary towels/pads and tampons, napkins and napkin liners for babies and similar articles of any material will be levied a 30% tax or Rs. 350 per kg.