Bankers to meet Treasury
Commercial banks are marching to the Treasury to make a case for why the tax on transactions proposed in the recent budget shouldn’t be implemented.
The Sri Lanka Bankers’ Association (SLBA), which is to meet the Treasury on this matter, is now working on certain representations to be made, according to SLBA’s new Secretary- General, Ravi de Silva. “The SLBA membership plans to meet with the Treasury on this,” he told the Business Times.
This time the banking sector was the main target for money spinning for the government with the budget proposing a 0.02 per cent tax (this is down from 0.05 per cent last year when it was first proposed) on banking transactions. This tax cannot be passed down to the customers. In 2016, Rs. 106 trillion has been recorded as transactions and the Treasury expects a large amount this year.
According to analysts, this tax also called the “Debt Repayment Levy” is a temporary tax to be enacted for three years with the view of utilising the tax proceeds to government’s debt repayment. The proposal is expected to generate a-significant Rs. 20 billion revenue (second highest revenue measure) to the government.
“However, if the banks truly absorb this cost without passing on to the customers it would bring the profitability of the banking sector collectively down by Rs. 20 billion at a time they are required to implement Basel III capital rules by early 2019 and increase minimum core capital from the current Rs.10 billion to Rs.20 billion by 31 December 2020,” Ravi Abeysuriya, President Colombo Stock Brokers Association said.