June 25, Colombo: The Chief Ministers of Sri Lanka's Provincial Councils have decided to introduce a controversial new tax that can change the current tax structure.

The Provincial Councils will introduce a levy on products produced in one province and sold in another province, according to the new decision that was taken at the 21st Chief Ministers’ Conference held yesterday and the day before at Ambilipitiya in the Sabaragamuwa Province.

The decision by the seven Provincial Councils, all governed by the same ruling alliance, followed a recent government decision to slash the funds provided to provinces almost by 50%, given the increases to the defense budget.

The central government has informed all Provincial Councils not to start any new development projects this year and to use the grants for 2007 to finish the unfinished development projects begun in 2006.