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Thursday Nov 14, 2024
Friday, 1 February 2013 00:01 - - {{hitsCtrl.values.hits}}
Following is a statement issued by the Tea Exporters’ Association on the revision of tea export cess for bulk tea
A large number of tea export containers were held up following a sudden revision of the tea export cess for bulk teas which had apparently come in to force through a gazette notification dated 23 January 2013. The revised levy unfairly thrust upon the tea export sector is Rs. 10 per kilogram or 5% on the preceding week’s Colombo auction elevational average for the particular grade of tea being shipped.
The Tea Exporters’ Association strongly objects to this sudden revision of the tea cess payable for bulk tea (flavoured and unflavoured) as it is in effect an increase since the Colombo tea price averages have been in the region of Rs. 380 to Rs. 420 per kilogram in the last many weeks. Therefore, the applicable cess for most bulk tea shipments based on the new definition is approximately double of the cess currently paid. Nearly 50% of Sri Lanka’s tea exports are still executed in bulk form classification of which is based on packing above 10 kilograms per package.
The tea cess for bulk tea (packing over 10 kilograms per package) was increased from Rs. 4 per kilogram to Rs. 10 at the budget of November 2010. In little over two years a further increase has been introduced by way of this revision which the tea exporters view as grossly unfair considering the many export contracts entered into prior to the date of the gazette notification but shipped since 23 January. The exporters are bound to lose heavily on orders already confirmed and this will seriously affect tea prices as cess and levies alone now account for over Rs. 22 per kilogram.
TEA also views this revision to seriously affect the competitiveness of ‘Ceylon Tea’ in the long run considering that a fair weight of tea is still exported in bulk. This is as a result of exporters’ ability to pay up at the auctions being further reduced. It was already evident from the decline in tea prices at the 30 January auctions.
It was surprising to find that the Ministry of Plantation Industries – the line ministry for tea and the regulatory body – the Sri Lanka Tea Board were unaware of the new development until the afternoon of 30 January when exporters began to complain that their export containers were held up until Customs authorities were clear on the new definition on cess.
TEA is made to understand that the revision was introduced under the Export Development Board Act and the Plantation Ministry and the Tea Board were oblivious to this.
The association appeals to the authorities concerned to immediately halt the latest revision on cess until all stakeholders are given a fair opportunity to explain the serious impact this will have on tea incomes for the smallholders and the plantation companies.
