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Sri Lanka cannot give state land at 100-rupees to Ceylon Steel magnate: Rajitha

Jan 26, 2017 12:15 PM GMT+0530 | 0 Comment(s)

ECONOMYNEXT - Sri Lanka cannot give land at 100 rupees an acre to controversial businessman, Nandana Lokuvithana Health Minister Rajitha Senaratne said, amid a rising scandal over a so-called sweetheart deal involving land and extended tax holidays to a tyre factory.

"No one can be given land at 100 rupees an acre," Minister Senaratne told reporters. "There was a time when it was done. But after I became the land minister that was stopped.

"Even the President cannot give land at 100 rupees (about 66 US cents)"

Senaratne said Lokuliyana was a person who was claimed to manage funds of ex-President Mahinda Rajapaksa and Prime Minister Ranil Wickremesinge who attended the ground breaking ceremony of the factory only knew details in the morning.

Sri Lanka's The Sunday Times newspaper reported that Rigid Tyres, a firm that will produce vehicle tyres, will get 100 acres of land for a leas rent of 10,000 rupees a year for 99-years.

Other firms paid as much as 3850 dollars an acre for a year for a 50 year lease in the Board of Investment industrial zone, the report said.

Sri Lanka's Development Strategies Ministry given the concessions going through a Cabinet Committee on Economic Management.

RIGID Tyres will also get a 12-year tax income tax holiday.

The tax break comes as tax holidays have been identified as perhaps the most important reason for Sri Lanka's less than stellar tax revenues.

According to latest reports the firm has also been allowed to sell 40 percent of its output in the domestic import duty protected market and only export 60 percent of the output. Earlier the government claimed that only 75 percent will be sold domestically.

Sri Lanka tyre market is protected by import duties to shield CEAT-Kelani, and India Sri Lanka joint venture from competition and force domestic consumers to pay higher prices for tyres.

Analysts say having a second domestic producer can produce some competition, but there is also the possibility of a duopoly developing, and even prices being pushed up.

It does not make sense to give a tax holiday to firm that enjoys tax protection, analysts say.

Lokuvithana controls Ceylon Steel Corporation, which is also import duty protected, allowing the firm to exploit families who trying build houses by overpricing steel (rebar) over world market prices at a time when global steel prices have plunged.

Heavy tax protection was given to help several oligarchs to exploit domestic consumers by the ousted Rajapaksa regime, which are continuing, according to liberty advocates. (Colombo/Jan26/2017)

 


 

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