Proposed Relief to the Tourism Industry
In 2008, the TDL collection was nearly Rs.300 million and in view of the downturn in the economy the estimated amount for 2009 was Rs.250 million.
In view of the seriousness of the situation, and with a view to assisting the industry it is proposed to defer the collection of the first and second quarter TDLs by three and six months respectively, without charging the 1% default interest.
Quarter Due Date Proposed Date of Collection
First 30th June 31st September
Second 30th September 31st September
The proposed scheme is expected to have an impact on the cash flow situation of the four institutions and the need to be managed by delaying the payments to the creditors.
Procedure To Be Followed:
Step1 Obtain the approval of the Board of Management of SLTDA
Step 2 Obtain the concurrence of the SLTPB, SLITHM, and SLCB
Step 3 Obtain the approval of the Cabinet and the Parliament
The above three steps, need to be completed before the end of March 2009.
Crisis Situation Fund
Tourism is a key and priority sector of the Sri Lankan economy, which provides employment opportunities for people in the rural areas and to develop the regions that are undeveloped. It also reduces poverty. In 2007, tourism was the fourth largest foreign exchange earner and contributed nearly 8 % of the total foreign exchange earnings of Sri Lanka.
As per the Finance Act No. 38 of 2004, the Tourism Development Fund (TDF) was created on September 1st, 2004. It consists of 1/3 of the Embarkation Levy (EL) and Tourism Development Levy (TDL) (1 % of the turnover of the Establishments that are registered with the Sri Lanka Tourism Development Authority). During the first eleven months of 2008, the TDF was Rs.900 million and was estimated to reach rupees 1 billion by the end of 2008. In terms of section 24(8) of the Tourism Act No. 38 of 2005[More], the TDF is distributed among the four institutions as follows:
Sri Lanka Tourism Promotion Bureau (SLTPB) - 70 %
Sri Lanka Tourism Development Authority - 14 %
Sri Lanka Institute of Tourism and Hotel Management - 12 %
Sri Lanka Convention Bureau - 04 %
Prior to September 1st, 2004, the former Ceylon Tourist Board was operating on a grant received from the general treasury, which is now of the opinion that after the creation of TDF, all activities of the above four organisations should be managed out of the TDF, without additional funds from the general treasury.
Tourism is a highly sensitive industry, operations of which are affected by the internal and external factors such as the security situation in the country, world financial crisis, natural disasters such as the tsunami etc. During such crisis situations, decrease in tourist arrivals may occur, which results in loss of income for those who have invested in tourism related activities.
In the current economic context, stakeholders in tourism are requesting the Ministry of Tourism and the Establishments that are coming under it, to provide financial support so that they will continue to be in tourism businesses. If a Tourism Business Establishment is forced to close down, it results in loss of revenue and in unemployment. Therefore, to assist investors in tourism in crisis situations, it is proposed to create a crisis management fund.
Objectives
As per section 44 (4) of the Tourism Act No. 38 of 2005, all Establishments providing services to tourists need to be registered with the Sri Lanka Tourism Development Authority (SLTDA), provided those Establishments meet the minimum quality standards. There is also a scheme implemented by the SLTDA to incorporate all informal sector Tourism Establishments into the formal sector. Therefore, the objective of Sri Lanka Tourism is to ensure that all tourism service providers are registered with the SLTDA.
All Tourist Establishments registered with the SLTDA contribute 1 % of their turnover to ensure growth and for the long term sustainability of this vital industry.
The objective is to provide funds to assist stake holders during crisis situations, so that they will continue to be in business, provide revenue to the state and not be forced to retrench their employees.
Creation of a Fund To Manage Crisis In Tourism
In terms of section 12 of the Finance Act No. 25 of 2003 and section 24(1) of the Tourism Act No. 38 of 2005, it is the responsibility of the SLTDA to collect TDF.
The total amount collected as TDF is distributed among the four institutions as per the section 24 (8) of the Tourism Act No. 38 of 2005.
It is proposed to set aside a percentage of the annual income prior to the distribution of resources from the TDF, which will be used to assist crisis situations.
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