The CTTA the in 2010 an export cess for packages bigger than 10 kilograms was raised 150 percent from 10 rupees from 4.00 rupees. A tea promotion and marketing levy of 3.50 rupees was also imposed around the time.
"Now, like a bolt from the blue, the Industry has just learnt that, retroactively, with effect from January 23, 2013, the export cess on tea in bulk has been enhanced by a further approximately 100 per cent," the CTTA said in a statement.
"The total absence of advance notice of this fiscal levy will have serious repercussions on the Export Trade, the Industry at large and the country," the CTTA said.
"Exporters will be affected to various degrees, depending on the stage at which export commitments are currently placed, as elucidated below."
The tax has been implemented without consulting the line ministry concerned, the regulatory body or the tea trader associations.
This has been implemented without consultation with the Line Ministry, the Regulatory Authority of the Tea Industry and the apex body of the Industry, the Colombo Tea Traders’ Association, where all were kept in the dark with regard to this decision.
Exporters who had contracted ahead were hard hit by the tax which was imposed with retroactive effect, the CTTA said.
"Contracts against which consignments are packed and ready for shipment would have no provision for this increase in contractual prices and Exporters will have to absorb the entire burden, which will result in significant losses," the CTTA said.
"Likewise, Contracts against which teas have already been purchased but not processed would also have no provision for this increase made in contractual prices.
"Consequently, with teas already purchased at higher limits for allocation to these export consignments, Exporters will, once again, incur substantial losses, with no option but to absorb this additional charge."
After that prices will fall by the amount of the 10 rupee increase to compensate for the tax.
"The resultant lower net sale averages will impact on green leaf prices payable to Small holders," the CTTA said.
The cess levies were originally collected to be given back to growers but they have been withheld for years and subsequently a parliamentary decision has been made to consolidate the cess funds to be used as fiscal authorities saw fit, the CTTA said."This could mean that the Industry may not necessarily be the beneficiary, in any form, of funds that have been speciously extracted from its stakeholders, which, originally, were directly assigned to and regulated by the line Ministry," the CTTA said.
"These are all contributing to the progressive demise of this once great Industry."
In Sri Lanka taxes are hatched in secret and imposed by midnight gazette literary while citizens are sleeping, sometimes retroactively against the first principles of liberty established in free countries.