ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe has asked for strategy to boost gem and jewelry exports to 2 billion US dollars a year and discussed taxes and procedures that were hampering the industry, a statement said.
“Deliberations extended to discussions on taxes impacting the industry as well as the export and re-export procedures,” a statement from the President’s media office said.
“Pertinent stakeholders also shared insights with the President regarding the challenges that have arisen within the sector.”
“President Ranil Wickremesinghe assured that the government is fully prepared to provide necessary support and facilities if a formalized plan to elevate the gem and jewellery industry in Sri Lanka is promptly presented.”
He had called for a “well-structured strategy aimed at attaining an annual export revenue of at least two billion US dollars.”
Sri Lanka slammed a 15 percent tax on gold in April 2018 after cutting rates with printed money to suppress rates and target an output gap under the country’s ad hoc, unstable, impossible trinity, soft-peg arrangement labelled a flexible exchange rate.
Related Sri Lanka slaps 15-pct tax on gold imports as rupee plunges
Rates are cut with printed money for under flexible inflation targeting in the belief that inflation boosts growth, though the monetary instability and trade restrictions make it difficult to carry out normal economic activities.
Output gap targeting (printing money or depreciating the currency to generate high levels of inflation) has been legalized in a new monetary law.
Monetary instability driven tax also promoted the smuggling of gold, making people lose respect for law. Similar problems are also found in India.
Jewellers at the time complained that the tax made their products expensive. (Colombo/Aug13/2023)