FinMin continues to consult banks on Debt Repayment Levy

The Finance Ministry is still consulting with banks to clearly identify transactions that would be liable for the Debt Repayment Levy which was introduced in the 2018 budget, a ministry advisor said.

“We’ve been in discussions with some of the banks and consulting with regards to the necessity of either narrowing it down to a few identified transactions or providing some alternatives,” Finance and Mass Media Ministry Advisor Deshal de Mel said yesterday. Speaking at a forum organized by the Ceylon Chamber of Commerce this week, he said that the banking industry understands that the government had to bring in the levy to address vulnerabilities in the economy for the next three years, and that a clear sunset clause will be provided to end the levy after three years.

de Mel said that the consultative process with the banks are still ongoing, and after which the Finance Act has to be amended, with the whole process likely to take a couple of months.

“We need to ensure that we minimize the distortion in the market and at the same time we need to ensure that the desired level of revenue is collected,” he added.

Bankers had at several forums requested further clarity from government officials on the transactions which are liable for the levy.

According to the 2018 budget, the levy is scheduled to come into effect on April 1, 2018. It was the second largest new revenue measure in the budget, aiming to collect Rs. 20 billion during the year.
The budget had specified that the 0.02 percent levy will be charged on total cash transactions and should be paid by the financial institutions, without passing the burden on to their customers.

However Deputy Treasury Secretary S. R. Attygalle had said just after the budget reading that businesses somehow find a way to pass on the burden to the consumer despite the law disallowing it. (CW)