Some relief for masses

*PAYE tax threshold increased from Rs. 750,000 to 2.4 mn a year

*400 g powdered milk price reduced to Rs. 195
*Prices of ten other essential items also reduced
*Duty free vehicle permit scheme abolished, including that for MPs
* Mahapola University to be set up in Malabe
*Budget deficit stands at Rs. 740 billion
*Interest free three-year loan for undergrads to buy laptops
*Additional Rs. 10,000 Mn for Pubudamu Polonnaruwa Project
*A lump sum payment per person of Rs. 250,000 to July strikers
*Rs. 1 million insurance scheme for fishermen

*100,000 houses to be built in five years for slum dwellers

*EPF, ETF amalgamation only with the consent of workers, TUs
*Wholesale and retail trade to be exempted from VAT
November 21, 2015, 7:54 am
Finance Minister Ravi Karunanayake
presenting the Budget (Pics by Kamal Bogoda,
Dimuthu Premaratne and Saman
Abesiriwardena)
by Saman Indrajith

Finance Minister Ravi

Karunanayake yesterday delivered what the
government called a progressive and budget.
He took away the duty free vehicle scheme generally enjoyed by the
government sector while granting much needed relief to the hard working
private sector by raising the PAYE tax threshold. He requested that a pay
hike of Rs 2,500 be given to the private sector workers.
As for ordinary people, the countrys 20th Finance Minister presenting the
69th budget of independent Sri Lanka, reduced prices of at least 11
essential items including gas and kerosene.
He also brought down tax on environmentally friendly vehicles running on
solar, hydrogen and helium to 2.5 percent.
However, on the negative side the budget has increased the vehicle

emission tax charge, embarkation tax, one day passport charge etc. More
importantly he left the fate of the countrys only private medical colleges
and hundreds of its children in the balance.
"Our government is of the view that private universities should be allowed
to operate and offer courses except medicine. Such universities should be
monitored by the University Grants Commission to ensure quality and at
least 10 percent of the total placements should be awarded free of charge
to students who have successfully completed the local advanced level
examination," the minister said.
The proposals were aimed at creating a new economic and social order for
the benefit of all Sri Lankans encompassing Premier Ranil
Wickremesinghes mid-term economic policy announced on Nov 05.
"The 2016 budget will go in the annals of history as the most significant
budget ever to be presented as I represent a national government of
consensus akin to the first government of independent Sri Lanka which
was truly a national government," he said.
The Minister said that he was presenting proposals within the framework of
the mid-term economic policy announced by Prime Minister
Wickremesinghe with the objectives of generating one million employment
opportunities, enhancing economic levels, development of rural economies,
ensuring land ownership to rural and estate sectors, the middle class and
government employees and creating a wide and a strong middle class."
During the four and half hour speech, the Finance Minister lamented the
economic policies of the Rajapaksa government.
"What we inherited in January 2015 was a near-crisis legacy. The crisis
was not restricted merely to the economy but extended to foreign, welfare,
governance, law and order policy issues and if it were to continue would
have resulted in far reaching consequences to the nation and future
generations too. We have confronted the crisis situation with the utmost
dexterity and I am sure would be able to face up to the herculean task
with courage and confidence."
The Finance Minister, however, did not have time to read out all the
proposals outlined in his draft and tabled a considerable number of

sections to be entered into the Hansard with the permission of Speaker

Karu Jayasuriya. The Speaker around 5.24 pm proposed the Finance
Minister to take a five minute break as nearly half of the Members in the
Chamber had left Parliament already as it seemed that the reading the
proposals would take couple more hours. Finance Minister Karunayake
declined the offer but continued to read out the proposals leaving out
section after section from the proposal.
Finance Minister Karunanayake proposed to abolish all the vehicle permits
granted under different schemes including that of Parliamentarians for the
vehicle permit schemes that had been politicized and misused and have
created a huge revenue loss over Rs 40 billion a year to the government.
"At present, employees whose annual income is over Rs 750,000 is liable
for PAYE tax which is a progressive tax. The minimum tax rate is 16
percentI propose to increase the tax free annual threshold to Rs 2.4
million," he said.
Budget deficit stands at Rs 740 billion.
He proposed to exclude the wholesale and retail trade from VAT.
The casino entrance fee imposed in the last budget will be removed and an
annual levy imposed on the businesses of gaming other than rujino will be
increased to Rs 400 million.
"I propose to reduce Excise duty to 2.5 percent for the vehicles which are
run entirely on solar, hydrogen or helium," he said.
The Finance Minister proposed to establish a new university named
Mahapola University at Malabe. "I also proposed to provide laptops for
university students on interest free three-year loans. Also free wi-fi zones
will be provided for all universities. I propose to allocate Rs 300 million for
this purpose."
He proposed to reduce the special commodity levy on potatoes by Rs 25,
top bring down the price of 400 gram milk powder from Rs 310 to Rs 295,
to reduce price of infant milk powder by Rs 100 per kilo, to reduce the
price of a tin of canned fish of 425 grams to Rs 125, to limit the maximum

retail price of sprats to Rs 410 per kilo, to implement a maximum retail

price of Rs 169 per kilo of dhal, to impose a maximum retail price of Rs
1,100 per kilo of Katta dried fish, to impose a maximum retail price of Rs
169 per kilo of chick pea, and to reduce the price of a 12.5 kg gas cylinder
by Rs 150.
English being a link language in Sri Lanka, levies currently exempted on
Tamil teledramas, films and advertisements will also be extended to
English teledramas, films and advertisements as well, he said.
He proposed to allocate a further sum of Rs 10,000 million for the
implementation of the Pubudamu Polonnaruwa Project.
He said that amalgamation of the EPF and ETF would be only be pursued
once a consensus has been reached between the government and the
trade unions.
He encouraged the private sector to venture into suitable collaborations
with the Sri Lanka Navy to make use of immense potentials in engaging
in sea marshalling activities.
He proposed to make a lump sum payment per person of Rs 250,000 to
July strikers.
He proposed to issue 50 licenses for gold importers to import gold sans an
import duty. None would be allowed import gold henceforth without such a
license, he said.
Karunanayake was totally silent on promises made in the run up to the last
general election to help the hard pressed tea and rubber sectors, which are
reeling from low prices, way below the cost of production. Not a word was
uttered by him about promised guaranteed prices for the two vital export
commodities..
In order to promote an outward looking strategy for the countries
industries, the budget has proposed a public quoted EXIM bank with an
initial capital of Rs 25 billion to start operations as early as April 01, 2016
with joint subscription by the government and the industry.

The current 15 percent interest offered to senior citizens over the age of
60 up to a maximum deposit of one million rupees has been extended to
those above 55 years of age and the deposit cap too has been raised to Rs
1.5 million by roping in finance companies into the scheme.
Making a significant break with the policies followed by the Rajapaksa
government, the Finance Minister announced literal privatisation of a
number of government controlled prime business undertakings by
proposing to put them on the share market. They include Lanka Hospitals,
Hotel Developers PLC (Colombo Hilton), Hyatt Residencies, Waters Edge,
Grand Oriental Hotel, Ceylinco Hospital, and Mobitel.
On the much controversial proposal to amalgamate EPF and ETF under a
new management, the government appears to have backed down as the
budget speech clearly stated that "such strategy will only be pursued once
a consensus has been reached between the government and the trade
unions"
The popular fertiliser subsidy scheme too has come under a cap by
restricting it to a cash grant of Rs 25,000 per year and will be provided for
a maximum extent of one hectare and the Minister promised the existing
fertiliser subsidy to small scale paddy farmers.
The budget has also introduced a voucher scheme in place of the school
uniforms provided by the state since the time of the J.R. Jayewardene
government.
Posted by Thavam