News
JAAF opposes govt. move to abolish SVATs
questions timing, given current decline in exports
urges govt. to shield sector from unnecessary internal shocks
The Joint Apparel Association Forum (JAAF) has expressed its deep concerns and disappointment regarding a recent government decision to end the well-functioning Simplified Value Added Tax (SVAT) scheme.
Cabinet spokesman Minister Bandula Gunawardena last week disclosed that the Cabinet-of-Ministers approved a proposal by President Ranil Wickremesinghe, in his capacity as the Finance Minister, to draft a Bill to do away with SVAT, with effect from Jan 01, 2024. The Minister is on record as having told the post-Cabinet media briefing that this was done in line with the agreement with the International Monetary Fund (IMF)
JAAF has issued the following statement: “JAAF, representing the interests of the apparel industry, firmly believes that the abolition of SVAT for exporters will have detrimental effects on the sector, already reeling under the pressure of declining exports, jeopardizing the cash flows of businesses and impeding the efforts to return to overall growth.
The abolition of SVAT will create a further burden on an already stressed industry and, particularly, on company cash flows, as funds will be tied up in even the most efficient refund systems, JAAF stated, adding that the impulsive and non-consultative decision will have disastrous impacts on the long-term operations of a viable sector.
Whilst recognising the need for the Government to achieve its revenue targets. JAAF notes that the abolishing of SVAT is completely revenue neutral to the Department. Removal of SVAT will only lead to increased cash flow between the Exporter and the IRD. Sri Lanka’s track record on VAT refunds is poor and prior to the introduction of SVAT, exporters had refunds due from the Department that ran into over 18 months.
It is important to note that as history has shown, the refund system that existed before the introduction of SVAT had large fraud in the non-export sector, and not among exporting companies. Exporters utilize SVAT for the purchase of local inputs, which are subsequently converted into finished products for export. As such they have very little sales locally which reduces the potential for abuse of the system. In any event the likelihood of abuse is much higher in a system based on payment and refund as against a voucher system of SVAT.
Further, the decision has seemingly failed to consider the fact that apparel exporters may be compelled to import raw materials rather than purchasing them from domestic manufacturers and having their cash flows restricted by the VAT refund system. This will lead to increased imports, a detrimental effect on both the companies and the overall balance of trade. This will result in the loss of the unique vertical integration benefits Sri Lanka apparel has to offer, which over the long term may lead to questions being raised over the viability of companies and the jobs they create
Furthermore, the reintroduction of a VAT refund system, even under the most auspicious conditions, would necessitate the allocation of substantial Inland Revenue Department (IRD) resources for the constant follow-up and evaluation which a refund system will necessitate. This will only result in increased additional administrative costs for all parties and the misplacement of precious IRD resources and distracted staff.
Therefore, JAAF firmly recommends that the removal of SVAT from the export sector be approached with utmost caution. In the current climate of declining exports and its adverse effects on companies and employees, it is crucial to shield the sector from unnecessary internal shocks that would undoubtedly occur if SVAT were abolished, urging the Government to preserve SVAT for the export sector.”
The National New Paddy Harvesting Festival (Aluth Sahal Mangalya), a traditional annual ceremony of offering the first portion of the freshly harvested Maha season paddy to the sacred Sri Maha Bodhi, was held this morning (04) under the patronage of President Anura Kumara Disanayake at the historic Sri Maha Bodhi premises in Anuradhapura.
The ceremony was organized by the Ministry of Agriculture and the Department of Agrarian Services under the theme “In unison, let us cultivate the land, to build a self-sufficient nation” (අහරින් ස්වයංපෝෂිත දැයක් තනන්නට එක මිටට ගොවි බිමට), following the guidance of the Atamasthanadhipathi, the most Venerable Pallegama Hemarathana Nayaka Thera.
This ritual, which dates back to the era of ancient monarchs, saw the participation of farmers from across the country. In accordance with tradition, they prayed for timely rains and fertile fields and invoked blessings for a self-sufficient and prosperous economy through agriculture.
President Anura Kumara Disanayake first paid homage and received blessings from the sacred Jaya Sri Maha Bodhi before joining the ceremonial proceedings.
The sacred procession, which carried the newly harvested paddy from near the historic Sinha Kanuwa in Anuradhapura, arrived at the sandy courtyard (වැලි මලුව) of the Sri Maha Bodhi, marking the ceremonial commencement of the New Paddy Harvest Festival.
The Most Venerable Pallegama Hemarathana Nayaka Thera commenced the ritual by filling the golden bowl with the new paddy, after which representatives from all provinces added paddy from their respective regions, symbolically filling the golden bowl.
President Anura Kumara Disanayake also participated in this ritualistic moment, amidst the chanting of Pirith by the Maha Sangha.
A vessel of pure bee honey, traditionally offered to the Sri Maha Bodhi, was ceremonially presented to the President by Deputy Leader of the Vedda Community U.W. Bandiyala Eththo.
The vessel of ghee, brought from the historic Saman Devalaya in Sabaragamuwa, was also presented to President Anura Kumara Disanayake, to be used in the customary ghee offering at the Sri Maha Bodhi.
The President also received the commemorative plaque of the National New Paddy Harvest Festival and presented tokens of appreciation to farmer leaders who have made significant contributions to the development of the country’s agriculture sector.
As part of the initiative to secure a pest-free harvest, the President participated in the distribution of pest-resistant seed paddy to farming communities across the provinces.
Addressing the subsequent official ceremony, President Anura Kumara Disanayake stated that the current government is working to transform an economy that was in disarray. He noted that the Paddy Marketing Board is burdened with a debt of Rs. 28 billion, while harvested paddy is being left to spoil in storage.
The President emphasized that the current administration has accepted the responsibility of restoring and restructuring this disorderly system. He added that the government expects the support not only of the state machinery related to agriculture but also of all farming communities. He affirmed the intention to integrate Sri Lanka’s cultural and traditional systems to reclaim the legacy of the agricultural economy and thereby strengthen the national economy.
President Disanayake further stated that the country’s ancient kings achieved greatness through their contributions to agriculture and irrigation and that self-sufficiency in food was a critical factor in that success.
He highlighted that sustainable development has become a global discourse today and that Sri Lanka’s “Tank Cascade System” or “Vapi System,” stands as a remarkable example of sustainable development. The country’s irrigation system, which dates back nearly 2,000 years, continues to contribute to the advancement of agriculture even today.
As such, the government has allocated Rs. 2 billion in the current budget to rehabilitate the irrigation system and renovation work on the North Central Maha Ela Project has already commenced to revitalize the country’s agricultural industry. He added that the government also plans to develop seed farms to produce self-sufficient seeds, while protecting genetic ownership.
He further emphasized the need for fair prices for agricultural produce, both for farmers and consumers. Due to long-standing market distortions, the government will intervene over the next two to three harvesting seasons to ensure both parties receive fair prices.
The President also stated that the necessary provisions for such state interventions have been made in the current budget. Steps have been taken to create storage capacity to hold 300,000 metric tons of paddy, which is expected to mitigate market distortions going forward.
Among those present at the occasion were the Chief Incumbent of the Ruwanweliseya and Chancellor of the Rajarata University, Most Venerable Ithalawetunuwewe Gnanatillake Thera, the Chief Incumbent of the Lankaramaya, Most Venerable Ralapanawa Dhammajothi Thera and members of the clergy; Minister of Agriculture, Livestock, Lands and Irrigation K.D. Lalkantha; Minister of Trade, Commerce, Food Security and Cooperative Development Wasantha Samarasinghe; Governor of the North Central Province Wasantha Kumara Wimalasiri; and Deputy Minister of Agriculture and Livestock Namal Karunaratne, along with a large number of farmer leaders and other dignitaries.
- (PMD)
Prime Minister of India Narendra Modi arrived in the island a short while ago on a three-day state visit.
The Indian Prime Minister was received at the Katunayake International Airport by Sri Lanka’s Minister of Foreign Affairs Vijitha Herath.
PM Modi is accompanied by Minister of External Affairs S. Jaishankar, Indian National Security Advisor Ajit Doval, Indian Foreign Secretary and several senior officials of the Government of India.
The General Manager of Railways has announced that the following special train services will operate during the Sinhala and Tamil New Year period.
1. From Colombo Fort to Badulla – departing Colombo Fort at 1930 hrs on 11th, 12th, 19th and 20th April
2. From Badulla to Colombo Fort – departing Badulla at 1750 hrs on 11th, 12th, 19th and 20th April
3. From Galle to Anuradhapura – departing Galle at 0400 hrs on 12th and 13th April
4. From Anuradhapura to Galle – departing Anuradhapura at 1500 hrs on 12th and 13th April
5. From Colombo Fort to Galle – departing Colombo Fort at 120 hrs on 10th, 11th, 15th and 20th April
6. From Galle to Colombo Fort – departing Galle at 0610 hrs on 11th, 12th, 16th and 21st April
7. From Colombo Fort to Galle – departing Colombo Fort at 1330 hrs on 12th and 13th April
8. From Colombo Fort to Kankasanthurai [Intercity Express] – departing Colombo Fort at 0530 hrs on 11th and 18th April
9. From Kankasanthurai to Colombo Fort [Intercity Express] – departing Kankasanthurai at 1350 hrs on 11th and 18th April
10. From Beliatta to Colombo Fort – departing Beliatta at 0825 hrs on 12th, 13th, 18th, 19th and 20th April
We are working to stabilize and restructure an economy that was in disarray -President
Indian PM Modi arrives in Sri Lanka on a three day state visit
Special Train Services during Sinhala and Tamil New Year
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