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Tue, 21 October 2014 14:17:54
Sri Lanka ship fuel suppliers lobby against tax
30 Jan, 2013 11:20:25
Jan 30, 2013 (LBO) - Sri Lankan suppliers of fuel to ships could be pushed out of business if a new tax is implemented, shipping officials and tax experts have warned.
The trade has begun lobbying for the withdrawal of the five percent Ports and Airports Development Levy, (PAL) which they say could force them to raise prices which are already above rival bunkering centres, making them uncompetitive.

The PAL was to have come into effect in January but its implementation has been held back, they said.

Ralph Anandappa, chairman of the Ceylon Association of Ships’ Agents, said the levy on bunkering services could make them uncompetitive.

"We like to see PAL being withdrawn totally on bunker supplies to foreign ships," he told a forum organised by the KPMG tax firm and the Chartered Management Institute, a body for management professionals.

"Bunkering brings about 800 million rupees a year to the country of which 750 million rupees goes to the government and the rest to other stakeholders."

Anandappa warned that the imposition of PAL on bunkers would force suppliers to increase prices as margins were thin, making them uncompetitive.

"It also has additional effects on the industry. Ships' agents will be affected. All other services in Colombo port will be affected if ships do not call for bunkers."

Devika Weerasinghe, chief financial officer – transportation sector of the John Keells group, which has a subsidiary that supplies ship fuel, warned of a "huge foreign exchange loss to the country."

"Export revenue from bunker supplies is quite significant. So if ships stop bunkering, we'll lose foreign exchange," she told the forum. "If the five percent PAL is imposed it will totally take away the margins."

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READER COMMENT(S)
1. Craig Thomas Jan 31
The reason behind Sri Lanka becoming a failed state is the Public Servants / Bureaucrats / Public Policy makers who are ignorant of market economy and free trade principles. Government bureacrats are mainly coming from the university system into the public sector jobs without any experience in real world business and free enterprise.

They are a bunch of Socialists trying to impose regulations and government control on trade and economy without knowing the adverse effects of such policy making on the country's competitiveness in the world economy.

The best way to curtail this problem is to reduce the powers vested on government bureaucrats and allow private sector participation in policy making an imperative in the country's governance. The monopoly held by public bureaucrats in policy making should be challenged in the Supreme Court as a gross violation of human rights of the entire nation.