Minister of Finance Ravi Karunanayake on November 10 presented the Government’s proposals for the budget for the year 2017. The theme of the budget is speedy development with returns for all. In his speech, Karunanayake explained that prices of essential goods and fuel would be reduced to support consumers.
He further added that while investment zones would be set up to support the private sector, medium-term proposals would be brought to boost industry and agriculture. According to the proposals, plans are in place to attract investments and to strengthen the rule of law.
Following are some of the salient features of the budget:
♦ Setting up of a committee comprised members of the private and public sectors to ensure the implementation of the budget.
♦ Corporate income tax to be revised to a three-tier structure – 14%, 28% and 40%.
♦ Withholding Tax (WHT) to be increased from 10% to 14%.
♦ Tax incentives for the exporting of vehicles.
♦ Income tax is to be streamlined.
♦ Reduction of indirect taxes to 60% from 80%.
♦ Price reduction of dhal by Rs 10, potatoes by Rs 5, sprats by Rs 5, white sugar by Rs 2, kerosene by Rs 5 and gas by Rs 25 for a 12.5 kilogram cylinder.
♦ Highway toll to be reduced by Rs 50 from 9 p.m. to 5 a.m.
♦ Residential solar consumers to get an allocation of Rs 1,500 million at 50% interest benefit.
♦ Rs 25 million allocated for establishment of Pandit Amaradeva Music Centre.
♦ Rs 600 million for construction of regional courts, and residential facilities for judicial officers.
♦ Setting up of a separate debt office to curb debt servicing costs.
♦ Establish common booking platform to compete with Airbnb and Agoda as they do not pay tax
♦ A contributory pension scheme with an allocation of Rs 1,000 million.
♦ Rs 50 million for the establishment of a film archive.
♦ Loans of Rs 300,000 for media personnel.
♦ Foreigners can buy condominiums with a loan up to 40% of the value.
♦ A new securities act in 2017 and a separate board at the Colombo Stock Exchange for small and medium enterprises for low cost capital.
♦ The Ceylon Tobacco Company requested to contribute Rs 500 million to the President’s Fund.
♦ Samurdhi welfare scheme to be renamed as Jana Isuru.
♦ Establishment of a Consumer Financial Protection Authority
♦ Rs 3 billion to help Golden Key depositors.
♦ PPP modelled company to bring all telecom towers under one institution.
♦ Debt recovery act to be expanded to cover finance companies.
♦ Benchmarking of 2 year, 5 year and 10 year bonds.
♦ Euroclear platform for bonds.
♦ Rs 10 billion to be allocated as the initial capital for asset management for failing financial companies.
♦ Diversify the generation of electricity to liquefied natural gas (LNG) and green energy sources.
♦ Prepaid card scheme for bus users.
♦ Interest subsidy for electric cars to replace trishaws.
♦ Central Bank regulation to be improved with regard to pyramid schemes.
♦ The Ceylon Petroleum Corporation and Indian Oil to develop the upper Trincomalee oil tank farm.
♦ Rs 250 million for desalination plants in Jaffna and Puttalam.
♦ Pipe-borne water to be increased for 12 million consumers from the current nine million.
♦ School van owners to be encouraged to switch to 32-seater buses with incentives.
♦ Rs 100 million for a biotech farm.
♦ Rs 500 million interest subsidy for hotel refurbishment.
♦ Listing of non-strategic enterprises such as Hyatt, Grand Oriental Hotel, Hambantota Salt and Water’s Edge in 2017.
♦ Tax holidays for large-scale investments in under developed regions of the country.
♦ Rs 10,000 million allocated for a local Export-Import Bank (Exim bank) for the local industry.
♦ A 75% waiver of the Port and Airport Development Levy (PAL) for the construction sector.
♦ Rs 7,500 million allocated to the Ministry of Megapolis from the Ministry of Finance.
♦ The limit on foreign currency declarations by foreigners to be increased to
US$ 40,000 from US$ 15,000.
♦ Five year multiple entry visas for suitable investors.
♦ Two-hundred per cent capital allowance for businesses in the North and 100% capital allowances for investments above US$ 3 million excluding investments for lands in the Uva and the East.
♦ Exchange Control Act to be repealed.
♦ Amnesty for those blacklisted by the Credit Information Bureau with a default credit history of up to Rs 500,000.
♦ Castle Hospital will be upgraded under a PPP model with an allocation of Rs 3 billion.
♦ 45-hour flexible work hours for the private sector.
♦ Shops can be open till 11 p.m. Bus operators support sought.
♦ Time to start up a company to be reduced to four days from 10 days.
♦ Rs 100 million allocated to National Science Foundation to study kidney diseases.
♦ An additional Rs 750 million allocated for study on kidney diseases.
♦ Rs. 300 million for vocational training
♦ Skilled labour requirement for tourism is 100,000 and for textiles is 60,000
♦ Five year multiple entry visas for students who wish to study in Sri Lanka to promote education tourism.
♦ Scholarships for top students to study at Harvard University, the Massachusetts Institute of Technology and Singaporean universities.
♦ Rs 250 million allocated for the development of schools in plantations in Kegalle and Badulla.
♦ A new scholarship scheme for top performing school students. Rs 2,000 to be paid monthly.
♦ Rs 5 billion to provide Wi-Fi and Tabs for 100,000 graduates entering State universities.
♦ Rs 32 billion unused from 2016 left for expenditure.
♦ 3,500 schools to receive computers. Rs 5 billion allocated.
♦ Rs 2 billion additional allocation for the provision of basic facilities in schools.
♦ A 50% concession on loan interests for paddy, fruit and vegetable farmers.
♦ Rs 200 million allocated to examine the water in eight Districts.
♦ Rs 100 million to be allocated to develop the local poultry sector.
♦ Maximum retail price of a whole chicken (1kg) reduced to Rs 420
♦ Automated commodity exchange for tea, rubber and coconut at a cost of Rs 75 million.
♦ Rs 500 million to establish aquatic zones.
♦ Rs 400 million to boost fresh milk production.
♦ A 2% cess for imported sugar and 5% cess for ethanol to protect local producers.
♦ Taxes imposed on the tea industry will be simplified.
♦ Concessionary loans will be provided for agriculture cooperatives.
♦ Prioritizing the reduction of the budget deficit.
Meaningless Budget Former President and MP Mahinda Rajapaksa
The Budget has no sense. There were proposals and demands from various sectors of the country. The Government has levied taxes even on the cooperative movement. What else. I have nothing to talk on this budget. No enough relief measures to the public and it will take time people to realize that reality. However, we will vote against the Budget.
It’s a Test match, not a T20 Minister Kabir Hashim
We presented our first budget after considering the danger which they have done to the country. At present, we are entering to the development field.
We are a bit slow, but a steady path and none can stop us now going for the development. We have not made the lion’s share for the President, Prime Minister, and Lamborghinis, car races or unnecessary things. Allocations made to the rural development, handloom industry, fisheries sector and many others. I noted that the Joint Opposition thinks that we came to play a T20 match, but the reality is that we came to play a Test match and we will show them how to win it rebuilding the country.
Govt. has no vision for the future JVP Leader Anura Kumara Dissanayake
The Budget has shown that this government does not have clear path to go ahead. The Government imposed VAT on November 1 putting extra burden on the working masses of the country. Again the budget has imposed further taxes on many fields which did not come under the VAT. I think no other arguments are needed to say that the government is in a crisis situation. It plans to get the money from the ministries and departments to the Treasury. This is a ridiculous situation. This style of making the lifestyles are worse for the general public has begun from the budget and it will come in other ways too.
People-friendly budget Opposition Leader R. Sampanthan
It is a good Budget. It has covered almost all the areas of the country. Education and Health have been prioritized. I would comparatively say it is a people-friendly budget. The rays of development are shown to both the North and East provinces with the new development and economic plans by the Government.