Finance Minister Ravi Karunanayake yesterday presented what the government called a progressive budget focused on creating “a new economic and social order for the betterment of the country” by not only providing relief to the people but also paving the way for sustainable growth.
The Finance Minister, presenting the 71st budget of independent Sri Lanka, said the social inclusion was a matter of prime concern for the new government, which attempted, through the budget proposals, to enable the entire population to participate in the “journey for development”.
“Our attention has been drawn to the fundamental requirements of basic needs extending to land, housing, education and health. Hence, continuous improvement will be made in this regard to sustain the process.”
Karunanayake proposed to allocate Rs. 400 million for the continuance of subsidies in the agriculture sector. “We encourage the farmers and farmer cooperatives to improve mechanization through the use of machines such as Transplanters, Hand Weeders etc. As such, I propose to remove the Customs Duty, VAT and PAL applicable on such imports. To also further support farmer cooperatives, I propose a loan scheme where 75 percent of the interest will be borne by the government, for which I propose to allocate Rs. 50 million.”
The Government land to the extent of 20,000 acres from the Maduruoya Right Bank and other areas will be released to cultivate the 5 major food crops, fruits and vegetables on a commercial scale, using hi tech modern agricultural practices, targeting the export market. I propose that commercial scale farmers to be provided with a minimum land plot of 1,000 acres on a long term lease basis, he said.
To increase the supply of liquid milk within the country, he said the government had negotiated with foreign countries to import 15,000 high milk producing cattle breeds. “A minimum of 10 such cows will be given to each self-employed farmer, who must then recruit at least 2 Samurdhi recipients to be employed in the dairy farm. Farmers will be assisted through a gap financing scheme, for which I propose to allocate Rs. 400 million.”
“Education is centric in our development model. Since we took office, we have kept our promise of ensuring adequate funding for education. In fact, amidst severe fiscal constraints we faced last year, due to the undisciplined fiscal management of the previous government, we allocated in 2016, almost 3 times that of the allocations made in 2014. However, the Ministry of Education has been able to utilize only around Rs. 38,850 million at the end of the 3rd quarter of 2016. We took careful stock of the situation and therefore allocated almost Rs. 90,000 million for 2017. While I admit that allocation for 2017 is less than that of 2016, it is nevertheless 70 percent more than that of 2014. I will also be proposing the provision of an additional allocation of Rs. 17,480 million to further strengthen the development in the education sector,” Karunanayake said.
He proposed to allocate Rs 21,000 million to provide basic facilities such as, classrooms, laboratories and libraries in primary and secondary schools.
“We must create the enabling environment for our students to be able to acquire knowledge easily. We must give them a “Smart Classroom” for which we have already allocated Rs. 6,500 million. To supplement this venture, we will also provide free Tabs for almost 175,000 students who enter the Advanced Level (AL) classes and around 28,000 A/L teachers from 2017. I propose to allocate Rs. 5,000 million for this project. I invite the telecom service providers to support this initiative by providing Wi-Fi connections.”
To further strengthen the IT facilities in 3,500 schools, he proposed to allow schools to rent a maximum of 50 computers each, for which he proposed to allocate Rs. 5,000 million.
“We will introduce an insurance scheme for all school going children from the age of 5-19, covering 4.5 million students, which is a revolutionary move. Each child will be given a policy of Rs. 200,000. This scheme will cover both in and outpatient services, subject to a maximum of Rs. 100,000 for hospitalization and Rs. 10,000 for outpatient services. The government will bear the premium for which I propose to allocate Rs. 2,700 million.”
He proposed to allocate Rs 100 million to support the engagement of university students in extra curricular activities and proposed to extend the lecture hours at universities upto 8 pm.
“We will double the student intake to universities and higher educational institutions by 100 percent by 2020 compared to 2015. However, this endeavor will increase the intake to only 50,000 students.”
“We will initiate a loan scheme up to a maximum of Rs. 800,000 per student for the entire course of studies, which will be provided as an interest free loan to 15,000 students based on their Z score to follow courses in selected subjects to cater to the market demand in UGC approved non state degree awarding entities. To support this venture, I propose to allocate Rs. 300 million in 2017.”
“As I speak, many in our country continue to suffer from CKDu. This has developed not only as a health issue but also to be an unfortunate social issue as well. Honorable Speaker, we have already allocated Rs. 2,225 million to the Ministry of Health, to address the issues of CKDu and I propose to allocate a further Rs. 750 million in 2017.”
He said that the government would design a special incentive package with specific tax concessions for landmark investments of over USD 100 million and up to USD 500 million, and investments over USD 500 million and above, that will change our landscape; we will design a special incentive package with specific tax concessions. order to facilitate the smooth operation of their businesses and investments, I propose to issue a 5 year multi entry visa to such investors and their skilled expatriate labour, he said.
He proposed to set up four more free trade zones in Bandaragama, Embilipitiya, Puttalam and Vavuniya.
“We will commence work on the elevated highways connecting the new Kelani Bridge to Athurugiriya and the Kelani Bridge to the Port Area in 2017. To ease the traffic congestion in the Colombo Metropolitan area, we will also introduce a Light Rail Transit (LRT) system on identified 7 corridors in the Western Region, including, Borella- Battaramulla- Malabe; Kottawa – Malabe; Malabe – Kaduwela; Peliyagoda – Kadawatha; Fort- Maradana- Mattakuliya- Peliyagoda; Dematagoda- Kirulapone – Bambalapitiya and Fort- Bambalapitiya- Borella – Maradana.
One thousand million rupees had been proposed to allocate for the purpose of double tracking the Polgahawela-Kurunegala section and Aluthgama-Galle Section of the railway.
He said that the government would amalgamage the HDFC Bank and the State Mortgage and Investment Bank to create a Housing Bank and 7,500 million rupees had been allocated for the capital infusion.
“To further improve the home ownership, we will take necessary action to transfer ownership of public housing to dwellers who have lived in such houses for more than 15 years. This will start from 1st January 2017,” he said.
He proposed to allocate Rs 250 million to support Sri Lanka hosting the Vesak Festival of the UN in May 2017.
For the purpose of setting up a Film Archives and Restoration Unit at the National Film Corporation the government would allocate Rs 50 million and another rs 25 million to establish the Pandit Amaradeva Sangeetha Ashramaya.
“Local industrialists have made submissions with respect to the free telecast of advertisements of foreign products on cable and satellite television. As such, to create a level playing field, I propose to impose a tax of Rs. 50,000 for a 30 second advertisement of foreign products that are telecast through satellite and cable television. Film producers and local artists also made representations regarding the telecast of foreign films and teledramas dubbed into Sinhala and Tamil. As such, the present levy of Rs. 90,000 per 30 minute part will be increased to Rs. 300,000 per 30 minute part. Any such monies collected will be used to develop the local film industry.”
We will also introduce a loan scheme facility at no interest to purchase the required equipment that will enable regional correspondents who are registered with the Ministry of Mass Media who work under difficult circumstances to disseminate news, to obtain bank loans up to a maximum of Rs. 300,000 with a 100 percent interest subsidy by the government. Other Media personnel who are registered with the Ministry of Media will also be supported by granting 50 percent interest subsidy to obtain bank loans up to a maximum of Rs.150,000 to upgrade the equipment for media related activities. As such, I propose to allocate Rs. 25 million for this purpose.
He proposed the use of fingerprint machines to mark the attendance at all government institutions.
He said: “Owing to surplus of rice, 5 kilogrammes of rice per month will be distributed to each Samurdhi recipient. The cost of which will be deducted from the Samurdhi Stipend. I propose to reduce the maximum retail price of a. Green gram by Rs. 15 per Kg, b. Dhal by Rs. 10 per Kg , c. Potatoes by Rs. 5 per Kg , d. Sprats by Rs. 5 per Kg, e. White Sugar by Rs. 2 per Kg , f. Kerosene by Rs. 5 per litre , g. LP Gas by Rs. 25 per 12.5 Kg domestic cylinder. I also note that VAT will not be applicable on LP Gas. I also propose to maintain the price of a 400 g locally produced milk powder at Rs. 295 and 425 g locally produced canned fish at Rs. 125.
Tolls on the expressways would be reduced by Rs 50 between 9 pm and 5 am everyday, he said.
The income tax system of the Country is revisited with emphasis being made on the creation of a much simpler income tax regime with minimum tax exemptions and a broadened tax base. Job creation, investment in fixed assets in designated zones, clean energy and the innovation will be the sole grounds for incentives.
The corporate income tax rate is proposed to be revised to create a three tier structure of 14 percent, 28 percent and 40 percent. Income tax rate applicable on liquor, tobacco, betting and gaming, etc. will be continued at the rate of 40 percent. SMEs, Exporters of goods and services, Agricultural sector and Education sector will be subjected to the lower rate of 14 percent. All others including banking, finance, manufacturing and trading will be subjected to income tax at 28 percent. Income tax rate of 10 percent currently applicable on funds, dividends, treasury bills and bonds will be increased to 14 percent. The SME category will be redefined in a rationalized manner.
PAYE rate schedule will be revised in line with the personal income tax rates and all the exemptions applicable on various categories will be removed. Instead, the tax free threshold of Rs. 100,000 per month will be available for every employee on their employment income. The income from the secondary employment up to Rs. 50,000 per month will be liable for PAYE at 10 percent and if it is more than Rs. 50,000, the tax will be at the rate of 20 percent. The PAYE of the employees of state owned enterprises and other government institutions should be deducted from the employees’ emoluments and should not be paid by the institution.
To provide a better price for locally manufactured spirits, duty on imported ethanol will be upwardly revised. I also propose introducing Excise Duty of Rs. 25 per litre for imported non-potable liquor for giving further assistance to local manufacturers. Excise (Special Provisions) Duty will be introduced on the importation of beer can at the rate of Rs.10 per can of not more than 325 milliliter and Rs. 15 per can of more than 325 milliliter.
Capital Gain Tax (CGT) will be introduced with effect from 1st April 2017 at a rate of 10 percent. We consider this tax to be equitable as it bridges the income gap and assists the government initiatives in poverty alleviation.
Road accidents claim more and more lives daily. Most of the accidents are due to the traffic violations. I propose to increase fines charged on traffic offences and to increase the minimum fine to Rs. 2,500.
Budget deficit has been estimated at Rs 625 billion and it would be 4.6 percent of the GDP.
(Source: The Island – By Saman Indrajith)