Sri Lanka's LakSathosa to guzzle another billion rupees from tax-payers
Dec 29, 2015 11:58 AM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka's state-run Lak Sathosa retail chain will spend billion rupees of tax-payer money to expand to 500 shops from the current 309 in 2016, Trade Minister Rishard Bathiudeen has told parliament.
"I welcome the efforts of Hon. Finance Minister, RaviKarunanayake to revive Lak Sathosa, under my Ministry andto expand the distribution network by increasing the numberof outlets up to 500 from 309 at present, for which Rs.1,000 million to be allocated," he said.
"In addition to the present customer base, Lanka Sathosa has also planned to attract the high-end customers by upgrading its outlets and offering a quality service in par with the competitors in the market. Ten new outlets opened up to September in the year 2015."
Under the Rajapaksa regime LakSathosa operated with an implicit subsidy running into billions of rupees as it was exempted from value added tax, while shop owned by ordinary people were slammed VAT and a 'deemed VAT' as well.
The current administration has lifted VAT from wholesale and retail trade, improving rule of law but damaging the tax base.
Formal retail chains are a key source of final VAT in countries with better tax administration.
Bathiudeen said as of 15th September 2015, Lak Sathosa's 309 outlets had an average monthly business of 1.6 billion rupees a month, down from 2014's 2.8 billion rupees.
In June the Treasury agreed to give 7.5 billion rupees to LakSathosa after corruption and mis-management was uncovered at the state run company and found it owing 10 billion rupees to banks and 3 billion rupees to suppliers.
At the time Bathiudeen said the accounts of the company had not been internally or externally audited since 2012.
An audit by KPMG, an accounting firm had found end of period stocks were not properly taken. At the time at least a billion rupees of stocks were not in a saleable condition.
Along with a bloated public sector, which is stuffed every year with political henchmen and unemployable graduates state enterprises are one of the main burdens, holding back Sri Lanka's progress and putting more burdens on the poor, critics say. (Colombo/December29/2015)