This page contains a Flash digital edition of a book.
PARLIAMENTARY REPORT


SRI LANKA


FINANCIAL MEASURES HIGH ON THE AGENDA IN PARLIAMENT


Amendments to the Appropriation Act 2014 are people friendly


On 29 January 2015, the Minister of Finance of the new Government of Sri Lanka made a special statement in Parliament. The foremost intention of the Statement was to implement specific measures to provide relief to the people by reducing the rising cost of living. It was a pledge given at the Presidential Election campaign under the 100 day programme.


In his statement, the Minister of Finance, Hon. Ravi Karunanayake MP proposed several measures to provide relief to the general public as well as several other revenue and expenditure proposals. He also stated the importance of making the statement in a situation where it has made a significant change in the structure of the line Ministries in the government. Since the number of Ministries was reduced from 71 to 31, it required the reallocation of resources to newly created Ministries and seek the approval of the Parliament to formalize the new structure.


Expressing views on the Budget 2015, the Minster stated that the estimated deficit in the Budget does not reflect the contingent liabilities that the country has incurred over the past few years.


He said that the total


‘government’ debt at the end of 2014 would be about 74.4% and its real value would be about 88.9% if the contingent liabilities are included. Sri Lanka’s annual real economic growth averages around 7% during the last three years, while it expanded by


around 15% annually in nominal terms during the same period.


Expenditure Proposals The Minister proposed a salary revision for the public sector and stated that it would be recorded as the highest ever salary increase granted to public servants of Sri Lanka. He also proposed an increase to pensions.


Beneficiaries of Samurdhi Welfare Scheme were granted enhanced monthly payments with an increase of 200% with effect from April 2015. In order to reduce the cost of living, the Minister made several significant proposals to reduce fuel prices, passenger bus fares and school van hiring charges, taxes on 13 essential goods and LP gas prices.


Additional proposals


included granting 15% interest for deposits of senior citizens; providing an allowance for pregnant mothers; granting 50% reduction for farmer’s loans; providing guaranteed price for tea leaves, rubber and liquid milk; empowering the Youth Parliament; increasing the Decentralized Budget (DCB); special relief for people who had pawned jewellery; increasing healthcare expenditure to 3% of GDP; increasing education expenditure to 6% of GDP; the establishment of Innovator’s Commission; and providing concessions for Colombo City Dwellers relocated against their will.


Revenue Proposals Elaborating on the revenue measures, the Minister proposed several new forms of taxes. A tax termed as Mansion Tax of Rs. 1 million would be levied on owners of all houses valued at Rs. 150 million or more, or on houses above 10,000 square feet whichever is higher on an annual basis. Migrating Tax is a tax of 20% on foreign exchange taken out of the country by Sri Lankans who permanently leave Sri Lanka. A payment of Rs. 500,000 was proposed to be charged to dual citizenship holders. Super Gain Tax is a one off payment that any company or individual who has earned profits over Rs. 2,000 million in the tax year 2013/2014 would be liable to pay 25% of their profit. It was proposed to reduce taxes applicable on motor cars with engine capacity less than 1,000 cc by around 15%. The Minister was of the view that the present practice of depreciating the value of vehicles at the point of import has created many mal-practices, including under valuation of vehicles and changing the date of registration which has led to a significant amount of revenue loss to the government. Therefore, he proposed to remove the depreciation table with immediate effect and to revise the excise taxes applicable on hybrid vehicles in order to rectify the disparity between hybrid and normal motor cars. A one off special levy of Rs. 1,000 million was proposed to be imposed on all casino operators and an annual levy on liquor and beer manufacturers. The Minister stated that it had been decided to reformulate the licensing regulations through a tendering


120 | The Parliamentarian | 2015: Issue Two


process which would prohibit anyone possessing more than three licenses.


Commenting favourably on the measures taken to uplift the lives of people and public servants, the Leader of the Opposition, Hon. Nimal Siripala De Silva MP stated that the Opposition would be the main shareholder in providing these benefits. He stated that the proposals are minor changes to the proposals brought in the previous Budget. He said that it was doubted whether the revenue proposals were practical and realistic.


He inquired about the Government policy regarding the casino industry and stated that indirectly the Government has legalized it. Commenting on the newly introduced taxes, the Super Gain Tax and Mansion Tax, he stated that taxation should be based on clear and fair criteria. He stated that the then


Government had taken a number of measures to empower the local farmer but the new proposals may adversely affect local farmers and inquired whether the subsidies provided by the previous Budget would remain the same. The Hon. Sunil Handunnetti


MP stated that it is a positive factor that reliefs are granted on the cost of living but certain practical issue have arisen due to certain proposals made. Through the new taxation mechanism imposed on imported vehicles, he stated that the people who are already in the process of importing a vehicle face a greater difficultly as they have to open the Letters of Credit (L/C) before the new tax is imposed.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76