Construction industry says marginally affected by budget
View(s):Sri Lanka’s construction industry says it has been marginally affected by Thursday’s budget.
Surath Wickramasinghe, President – Chamber of Construction Industry, Sri Lanka (CCI), said in a statement that if the interim budget has concentrated more on the immediate benefits of the public at large under the Government’s 100 day programme to meet their essential needs, it should be commended.
The industry is also pleased that cement prices have been reduced by Rs. 99 which will help to lower the cost of construction.
He said the proposal for local consultants and contractors to undertake projects overseas and for the exemption of their profits from income tax is a good incentive to the industry. However this matter has other implications which could be resolved through discussion.
“Regarding foreign consultants and contractors, if the project funding originates from overseas, the proposal in the budget is acceptable to our industry. On the other hand, if the funding originates from Sri Lanka, the lead consultant or contractor should be Sri Lankan and they should be given the freedom to tie up with a foreign counterpart depending on the expertise required,” he said in a statement.
Dr. Wickramasinghe said the budget should have included incentives particularly for the construction of rural and urban housing by reducing the tax on some of the other essential imported materials such as glass and timber. Alternatively, it should have offered tax incentives for import substitution for the fabrication of building components such as purlins, doors and windows, roofing sheets and aluminium products to make the cost of construction more affordable to the lower and middle income groups.
“However introducing a Mansion tax of Rs. 1 million per annum for houses estimated to cost Rs. 100 million or exceeding 5000 sq ft will be unrealistic. The Rs. 100 million could even be spent when you build a house with luxury finishes, which may be under 3000 sq ft. Alternatively, some may design two units and connect it later and get over the 5000 sq ft area rule. In any case, only a limited number of persons can afford to build 5000 sq ft houses today?” he said.
The CCI President asked whether this same tax will be applicable for luxury apartments of 5000 sq ft? If so, it will be counterproductive since the developers will not be interested to cater for the high end foreign investors, who are interested in large apartments. This should be reconsidered, he urged.