More taxes on imported goods to promote local products
Sri Lanka will further increase import duties and cess on some of the imported goods to curb demand and encourage import substitution aimed at narrowing the fiscal deficit to 6.5 per cent of GDP from 7.0 per cent in 2012 through the 2013 budget proposals, Finance Ministry sources said.
These proposals are aimed at increasing the state revenue and reducing the capital and recurrent expenditure, the sources revealed. They said the government is no longer sacrificing much needed investments to develop infrastructure in order to meet recurrent expenditure obligations.
A senior Finance Ministry official said there is a “continued reliance” on imported food, pharmaceuticals, dairy products, textile, sugar and a range of construction material such as cement, steel, furniture and machinery. “To change this we need heavy investments in import replacement activities such as food crops, pharmaceuticals, dairy products, sugar, textile, plantation, apparels, etc, to make a strong economy,” he said.
The ministry is considering imposing indirect taxes on certain Fast Moving Consumer Goods (FMCGs) such as toothpaste, biscuits, shampoo packets, etc in terms of the raw material imports used in these products. This is addition to already prevailing taxes like VAT.
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