Sampath Bank chief has rapped authorities for continuing to look at financial instruments as a convenient source of raising revenue.
The banking sector currently forks out 15 percent of their earnings as Value Added Tax. rn
rnThe charge was brought in last year, fixed at 10 percent computed on total gross emoluments paid to employees and the net profit before tax.rn
rnThe government saw it fit to choose that route, after it abolished business turnover tax (BTT) and national security levy (NSL) in 2001 and 2002. rn
rnHowever, these two forms of indirect taxation did not impact banks profits, as they were passed onto customers.rn
rnTo avoid this, the Treasury imposed a stiff guideline on VAT. The tax was supposed to be a temporary revenue generation method, but the government raised it by five percent to 15 percent at the 2004 budget.rn
rnThe Treasury also brought in Debits Tax on certain banking transactions, as a temporary measure. But that too continues. rn
rnCritics have pointed out that