ECONOMYNEXT - A debit tax on bank withdrawals will have to be paid by banks, Finance Minister Ravi Karunanayake said, amid rising concerns that the levy will discourage the use of the banking system and encourage a cash economy.
The budget for 2017 imposed a 5 rupee tax on every 10,000 rupees withdrawn from banks.
Karunanayake told a forum organized by Sri Lanka's Ceylon Chamber of Commerce that banks will have to bear the cost of the so-called Financial Transactions Levy (FTL).
Banks will now have to recover the tax by giving lower interest rates to customer overall, or raising interest rates to lenders, or both analysts say.
The debit tax was imposed in Sri Lanka in the early 2000s and withdrawn.
The imposition of the new tax goes against the declared principle of the new administration to simplify the tax system and reduce the total number of taxes.
Many of Sri Lanka's policy wonks have been calling to increase the tax to gross domestic product ratio, going against the time honoured principle of basic economics that rulers should be forced to cut spending improving the use of tax money, rather than allowing them to take more money.
The new administration ratcheted up spending on state workers.
The budget for 2017 imposed a 5 rupee tax on every 10,000 rupees withdrawn from banks.
Karunanayake told a forum organized by Sri Lanka's Ceylon Chamber of Commerce that banks will have to bear the cost of the so-called Financial Transactions Levy (FTL).
Banks will now have to recover the tax by giving lower interest rates to customer overall, or raising interest rates to lenders, or both analysts say.
The debit tax was imposed in Sri Lanka in the early 2000s and withdrawn.
The imposition of the new tax goes against the declared principle of the new administration to simplify the tax system and reduce the total number of taxes.
Many of Sri Lanka's policy wonks have been calling to increase the tax to gross domestic product ratio, going against the time honoured principle of basic economics that rulers should be forced to cut spending improving the use of tax money, rather than allowing them to take more money.
The new administration ratcheted up spending on state workers.
No comments:
Post a Comment