Lowering of import taxes is a recognition of the importance of the local retail sector to the economy, an official said.
Chris Dharmakirti, Chief Operating Officer of the Government run Strategic Enterprises Management Agency speaking to reporters on Wednesday said that this was a shift from looking at the interests of sectors such as exports only.
The Government on Tuesday reduced Import taxes on seven items, namely mobile phones, cameras, electrical items, watches, motor-vehicles, raw materials and machinery.
He said that the government has brought down the effective import tax rate on those items by 50%. An importer of certain of those products was more cautious, saying that as the announcement was made only on Tuesday, it was too early to say what the effective tax benefit would be.
Nimesh Udeshi, Managing Director Siedles (Pvt.) Ltd., an importer of electronic items said that the steps taken by the Government to reduce taxes on portable items such as camcorders, digital cameras and mobile phones “will make our prices competitive.”
“And this is a very good first step, this will help the private sector to invest in rental space.”
He however said that it was too early to tell what the effective import tax benefit would be.
Dharmakirti said that this is a move to make Sri Lanka a regional shopping hub, comparable with Dubai, Singapore and Bangkok, targeting the Indian market in particular.
He claimed that the effective tax rate on diesel motor vehicles has been reduced from 540% to 287%, petrol from 360% to 187% and electric powered motor vehicles from 220% to 144% because of these concessions.
Dharmakirti said that the revenue loss was marginal as a prohibitive tax regime made imports too costly, therewith negating Government revenue, with the number of vehicles registered last year being a negligible 6,000. On the contrary, the lowering of import taxes would result in trade expansion, therewith enhancing revenue to the Government, he said.
Federation of Chambers of Commerce and Industry of Sri Lanka (F.C.C.I.S.L.) Vice President Kumar Mallimaratchi said that the lowering of taxes on importation of motor-vehicles would give a boost to the tourism industry which last benefited from such a move in 1998.“It’s the Winter 2010/11 season that has to be looked at,” he said.
F.C.C.I.S.L. President Kosala Wickramanayake said that the private sector was happy with the surcharge reduction by the Government on Tuesday. Chambers have been lobbying for the past nine months since the war end, for a reduction.
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