Business

Cost of living to soar with Social Security Levy

 

  • Levy in effect since last Saturday 
  • Importers say prices of essentials may see an uptick to offset impact on businesses

 

By Imsha Iqbal 

 

The Social Security Levy (SSL), which came into effect on 1 October, is expected to increase the cost of living amidst the economic crisis that Sri Lanka is currently facing, The Morning Business learns.

Speaking to The Morning Business yesterday (2), Essential Food Commodities Importers and Traders’ Association (EFCITA) President G. Rajendran stated: “This 2.5% SSL that has been imposed will impact commodity prices, causing them to go up.“

Accordingly, the price of rice increased by Rs. 5 per kg, while sugar increased by Rs. 6 per kg after the SSL came into effect on 1 October. Thus, the increase in prices of these essential commodities will impact the cost of living, explained the EFCITA President.  

The imposed levy of 2.5% is to obtain contributions to the Social Security Fund from importers, manufacturers, service providers, wholesalers, and retailers whose annual turnover exceeds Rs. 120 million.

This aforesaid levy was introduced as a proposal in the Budget 2022, although the International Chamber of Commerce Sri Lanka (ICCSL) warned that such a proposal would significantly  impact small and medium-scale enterprises (SMEs).

Regarding the levy, ICCSL Chairman Dinesh Weerakkody said last November: “We recommend considering sourcing this contribution through established measures. Small and medium enterprises (SMEs), for example, will not be able to absorb a 2.5% levy in their gross profit margin. The contribution to turnover will also keep away potential foreign direct investment (FDI) from big trading agencies that might potentially set up in the Port City.”

Responding to a query made by The Morning Business, Rajendran said that despite the ban on open account transactions, Sri Lankan banks have thus far been able to facilitate the importers. 

Importers have also been given a relief period on payments for goods such as wheat and dhal, which have a long transhipment period.

Also, he noted that he has not observed any food shortages in Colombo in particular, as there are enough food stocks at the moment.