Lankan tea exporters furious over sudden increase in tea export cess
View(s):Sri Lankan tea exporters are furious over a sudden revision in the cess for bulk tea saying a large number of tea export containers were held up at the Customs due to the new tax coming into force through a 23rd January gazette notification.
The revised levy unfairly thrust upon the tea export sector is Rs 10 per kg or 5 per cent on the preceding week’s Colombo auction elevational average for the particular grade of tea being shipped, according to a statement issued by the Tea Exporters’ Association (TEA).
File pic of the Colombo tea auction.
The association said it strongly objected to this sudden revision of the tea cess payable for bulk tea (flavoured and unflavoured) as it is in effect an increase since the Colombo tea price averages have been in the region of Rs 380 to Rs 420 per kg 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. Nearly 50 per cent of Sri Lanka’s tea exports are still executed in bulk form classification of which is based on packing above 10 kg per package,” it said.
The tea cess for bulk tea (packing over 10 kg per package) was increased from Rs 4 per kg to Rs 10 at the budget of November 2010. In just over two years 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 23rd January. The TEA said 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 Rs 22 per kg.
The TEA said it 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. 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 this week’s auctions.
“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 (Wednesday) when exporters began to complain that their export containers are held up until Customs authorities were clear on the new definition on cess. 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 statement said.
The association appealed 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 smallholders and the plantation companies.
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