The government is to implement a 5% export rebate scheme, as a performance based incentive, to all industrial exporters, soon.
The rebate scheme was initially approved for the apparel and leather goods sectors, but it has now been extended to cover all ‘industrial’ exporters.
This is part of the government’s aid package to help export industries hit by the global recession. The Finance Ministry says the “operational guidelines” for the rebate scheme are finalised and the programme will be implemented soon. Exporters can apply for cash outright, or set off the rebate against their taxes. “The 5% export rebate will be given based on maintaining export performance.
The government will give them money, through the Export Development Board, after their claims are verified, or, exporters can set it off against their taxes. The scheme will be put into place very quickly,” the Director General of Fiscal Policy, Ministry of Finance, S R Attygalle, told The Sunday Times FT. The export incentive is linked to maintaining export performance and employment levels.
“The 5% rebate on export earnings will be given to companies that maintain export earnings and the number of employees, compared to 2008,” said Mr Attygalle.
No extra borrowing
The Finance Ministry also said the government will not resort to extra borrowings, beyond the budget, to finance its Rs 16 billion economic stimulus package announced in end-December 2008. However, the package will have to get Parliament’s approval, as a supplementary cost, due to other technicalities. “There will be no extra borrowings, outside what was approved by the November national budget, to finance the Rs 16 billion stimulus package,” said Mr Attygalle.
The Finance Ministry says it will raise the required money through savings on oil price reductions, cut-backs on ministers’ expenses and by increasing taxes on imported commodity items. Existing budgetary allocations to the Export Development Board, for export promotions, will also be channelled in, to finance the stimulus package.
“We do not need to go for extra borrowings to finance the stimulus package. We can cover costs through expenditure savings and revenue increases,” said Mr Attygalle. The government has already increased cess and duties on a large number of imported items, mainly commodities.
A set of revised cess rates came into effect from February 1. The Finance Ministry says the increased import taxes will not increase the cost of living because world market prices of commodities have dropped and importers can absorb the tax increase without increasing domestic market prices. “The added cess on commodities will not increase cost of living.
This is because importers will not have to increase selling prices in the country on account of the revised cess, because the prices they pay, to buy from the world markets, have reduced,” said Mr Attygalle.
The Finance Ministry said that certain aspects of the stimulus package have already been implemented and the balance areas will come into operation soon.
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