Tourists may have to pay more to visit Sri Lanka
Travellers to Sri Lanka would be taxed up to around 3.5 per cent through the introduction of two new taxes as a result of which the industry would have to adjust their rates.Tourism Minister John Amaratunga said that though the Tourism Development Levy (TDL) embodied in the Tourism Act of 2005 was brought in to charge tourists visiting the country through a 1 per cent tax on all services obtained to fund promotional activitis of the tourism industry, it would be replaced with two separate taxes.
The TDL funds had accumulated over the years, the minister said, adding that this was to the detriment of the current economic situation whereby the Treasury was hard-strapped for cash and was trying to pursue all monies to bridge the budget deficit. In this regard, the tourism industry would have to adjust to the rates according to the adoption of the two new taxes, one being the increase on the Value Added Tax (VAT). Minister Amaratunga noted that in this regard, the Finance Ministry has proposed the removal of the TDL and the introduction of two new taxes that could rope in taxes amounting to about 3.5 per cent, up from the present 1 per cent duty charged on tourists.
Through the collection of such taxes the Finance Ministry would capture these monies without it being sent directly to the Tourism Ministry that was in the process of disbursing these funds for appropriate use.The minister pointed out that upon assuming duties he had found that there was over Rs.1 billion that had accumulated over the years as funds from the TDL.Asked why it was not used for promotional activities, he noted that this was already used for such work and they had to only fund an advertising campaign.
A similar proposal was made by the present regime’s Finance Ministry that was attempting to bridge the budget deficit through the absorption of such funds sent directly to the ministries by diverting these to the Treasury during the 100 day-programme.However, at the time it was thwarted by the respective industries and this was not carried out but it has now been submitted as a budget proposal.Commenting on this Minister Amaratunga said “that’s the manipulation” pointing out that even he had questioned why such funds were allowed to accumulate.He noted that should there be a request for funds for development work it could be obtained from the Treasury by simply filing a cabinet paper in this regard.
Moreover, the minister pointed out that next year they would bring in legislation and necessary amendments in this regard.