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Thu, 31 July 2014 20:28:18
Sri Lanka tea exporters protest sudden tax
30 Jan, 2013 22:18:42
Jan 30, 2013 (LBO) - Sri Lanka's tea exporters are protesting an export tax that they have found has come into effect from January 23, where a cess on bulk tea exports is estimated to have almost doubled.
"A large number of tea export containers were held up following a sudden revision of the tea export cess for bulk teas which had apparently come in to force through a gazette notification dated 23rd January 2013," Tea Exporters Association of Sri Lanka said in a statement.

"The revised levy unfairly thrust upon the tea export sector is Rs 10/- per kilogram or 5% on the preceding week's Colombo auction elevational average for the particular grade of tea being shipped."

"The Tea Exporters' Association strongly objects to this sudden revision of the tea cess payable for bulk tea (flavoured & unflavoured) as it is in effect an increase since the Colombo tea price averages have been in the region of Rs 380/- to 420/- per kilogram in the last many weeks."

"Therefore, the applicable cess for most bulk tea shipments based on the new definition is approximately double of the cess currently paid."

Export taxes eventually penalize the producer as they get the world price, less the export cess. Sri Lanka has penalized several categories of citizens for exporting products in bulk form for not 'adding value'.

"The TEA also views this revision to seriously affect the competitiveness of 'Ceylon tea' in the long run considering that a fair weight of tea is still exported in bulk," the TEA said.

"This is as a result of exporters ability to pay up at the auctions being further reduced. It was already evident from the decline in tea prices at today's auctions."

But in this case exporters who have contracted with buyers abroad without knowing about the tax are also losing money. The TEA said nearly 50 percent of tea is exported in bulk form.

A cess on tea packets over 10 kilogram which the state considered 'bulk' had been raised to 10 rupees a kilogram from 4 rupees in 2010.

"[A] further increase has been introduced by way of this revision which the tea exporters view as grossly unfair considering the many export contracts entered into prior to the date of the gazette notification but shipped since the 23rd January," the TEA said.

"The exporters are bound to lose heavily on orders already confirmed and this will seriously affect tea prices as cess and levies alone now account for over 22 rupees per kilogram."

In Sri Lanka taxes - usually on imports - are raised by midnight gazette literally while citizens are sleeping undermining rule of law, promoting arbitrary rule and making their lives uncertain when they wake up.

"It was surprising to find that the Ministry of Plantation Industries - the line ministry for tea and the regulatory body - the Sri Lanka Tea Board were unaware of the new development until this afternoon when exporters began to complain that their export containers are held up until Customs authorities were clear on the new definition on cess," the exporters said.

"The TEA is made to understand that the revision was introduced under the Export Development Board act and the Plantation Ministry and the Tea Board were oblivious to this.

"The association appeals to the authorities concerned to immediately halt the latest revision on cess until all stakeholders are given a fair opportunity to explain the serious impact this will have on tea incomes for the small holders and the Plantation companies."

Critics have pointed out that Sri Lanka's practice of imposing secretly hatched taxes which became prevalent in the 1970s undermine the principle of 'taxation by consent' which was established by the Magna Carta over 800 years ago in Britain setting the foundations to end arbitrary rule.

The principle was further strengthened by the 1698 British bill of rights where parliamentary consent was sought for all taxes, ending the 'Royal Prerogative' and is now followed by all free countries.

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READER COMMENT(S)
1. Jack Point Jan 31
The Midnight Bandit strikes again!!