Long-term lending vital:

Major changes to banking system mooted

New tax regime benefits all:

Indunil HEWAGE

The government calls for major changes in the banking system to promote and facilitate viable entrepreneurs while enhancing the potential of agriculture, tourism, construction and other lucrative business areas in the country.

Addressing a seminar on “Recent amendments to tax legislation”, Treasury and Economic Development Ministry Secretary Dr P B Jayasundara said the government expects effective changes in the Inland Revenue Department, Board of Investment and the banking system.

Accordingly, banks need to promote long-term lending. It is the responsibility of banks to create truly viable entrepreneurs who did not have privilege to have long-term lending earlier. Inland Revenue Department and banks need to adopt attitudinal and cultural change in respective systems as against the previous practices which they adopted for last several years.

“Banks and the financial sector have been empowered through a fairly large volume of resources to encourage lending. The Government is optimistic that Banks and financial institutions will provide long-term lending for new planting of rubber, tea and other crop cultivations.

Even from the food security point of view, wide range of agriculture loans should be encouraged not only for cultivation but also for crops storage, processing and marketing. Financial institutions can be a good candidate for long-term lending and construction industry needs to be facilitated by these organizations to fuel growth further in it,” Dr Jayasundara said.

Dr Jayasundara reiterated that many local firms have come up with proposals for road development and water supply projects and they have to be facilitated by the banks and other related institutions in an effective manner.

“Major taxes including single rate value added taxes, personal income tax, corporate taxes have been reduced. Five taxes are no longer applicable from April 2011 and this would help to have an accurate tax regime. In addition sector based taxes, particularly the telecommunication tax has been reduced.

“The government is optimistic that those industries would fall in line with the emerging culture,” he said.

“The government and the Inland Revenue Department expect a people friendly tax regime which would promote voluntary compliance rather than having forced compliance. The recently amended tax reforms would promote investments whilst giving more comfort to the public in the country,” Dr Jayasundara said.