Rajapaksa presents ‘non-traditional’ Budget

* Rs. 30 bn for rectifying teachers’ salary anomalies

* PTL’s Rs. 8.5 bn to be transferred to Treasury

* VAT on banks, financial service providers up from 15% to 18%

* One-time tax surcharge of 25% on some companies, etc.

* Rs. 5 bn for agrotechnology development

* Rs. 1 bn to Batik and Handloom manufacturing sector

* Rs. 5 bn for basic infrastructure development

* Price of cigarette increased by Rs 5

* Retirement age of public sector increased to 65

* Period for MPs to qualify for pension up from five to 10 yrs

by Saman Indrajith

Finance Minister Basil Rajapaksa, presenting what he described as a non-traditional Budget, yesterday, said that it would help increase government revenue and keep expenditure in check to boost investor confidence.

Minister Rajapaksa said that the government was presenting the Budget at a time when the country and the entire world were facing a difficult period.

“We are presenting the Budget amidst global challenges. Many countries are focusing on internal problems, there are climate problems, inflation and Covid-19 have disrupted economic activities,” Minister Rajapaksa said, presenting the country’s 76th annual Budget.

He said the country had been locked down several times to protect the people against Covid-19. The national economy had suffered a loss of around Rs. 500 billion rupees in revenue, he said.

Now, the country had achieved its vaccination target and was working closely with multilateral lenders to revive the economy, he said, adding that Rs. 30 billion would be allocated to rectify the salary anomalies affecting teachers and principals.

A one-time tax surcharge of 25% has been imposed on persons or companies with taxable income over Rs. 2 billion for the year of assessment 2020/2021.

Rs.100 billion is expected to be earned through this tax.

VAT on banks and financial service providers under supply of financial services by specified institutions will be increased to 18 percent from 15 percent. This tax should be paid monthly from 01 January 2022 to 31 December 2022. Furthermore, this tax should not be passed on to the customer. Rs 14 billion is expected to be earned through this tax.

Minister Rajapaksa proposed to transfer Rs. 8.5 billion that Perpetual Treasuries Ltd. had earned in violation of the Code of Conduct, from the Central Bank of Sri Lanka, to the Treasury.

He said the economy had to be developed in a sustainable manner.

Sri Lanka was on track to post a budget deficit around 10 percent of gross domestic product with the deficit up to July being at 6.2 percent of gross domestic product.

The price of a cigarette would be increased by five rupees, Minister Rajapaksa said, adding that the decision had been taken as the prices of cigarettes had not been increased in three years. The government expects to rake in an additional Rs. 8 billion.

The Finance Minister proposed to increase excise tax with immediate effect, and additional revenue of Rs. 25 billion is expected through this tax increase, and the gazette regarding the relevant tax increase would be published within a day.

Minister Rajapaksa said that the budgetary allocations for the MP would be increased by Rs. 5 million each and Rs. 15 million would be allocated to each MP for development activities in their electorates. Relief would be provided to school van and school bus operators affected by Covid-19, Minister Rajapaksa said, adding that Rs 400 million would be allocated for that purpose.

Rs. 700 million would be allocated for the provision of relief to three-wheeler drivers and Rs. 1,500 million for the bus operators, who had lost their revenue due to the Covid-19 pandemic.

Finance Minister proposed the employment of methods such as Blockchain technology, and moving towards mobile banking through the digitalisation of banks.

“Our government is always dedicated to safeguard the interests of our farmers,” he said, adding that however a clear law had not been formulated for this purpose. He proposed the drafting of the ‘Green Agricultural Development Act’ for the benefit of the farming community.

The country would be developed as a hub for “Wellness Tourism” and focus its attention on avenues of tourism such as “Event Tourism”, “Destination Tourism” and providing tourists with “Home Stays”.

A regulatory authority would be established for three-wheelers, Minister Rajapaksa said, noting that telecommunications network covering the entire country would be established immediately and all 10,155 schools in the country provided with fibre optic internet connections. Telecommunications connectivity and Internet access shortcomings in the country had been noticed during the pandemic, the Minister said, adding that the construction of new office buildings for the state institutions would be suspended for two years.

Annual Warrant for state expenditure would be made a Quarterly Warrant in the future, he said.

The government is planning to extend the retirement age for state sector employees to 65 years as the average life expectancy had increased and Sri Lanka’s population was ageing. “As they are able to engage in active service for a longer period of time, it is essential to make use of their experiences and maturity,” the Finance Minister added, proposing to extend the age limit for public servants’ pensions to 65.

Fuel allowance for ministers and state officials would be reduced by five litres each a month.

The minimum period an MP has to serve to obtain the pension has been extended from five to ten years.

The Finance Minister said that proposals and opinions of several organisations and individuals were obtained before preparing the budget proposals.

Since independence, all the government had failed to act with a clear vision with regard to the country’s foreign reserves, Minister Rajapaksa said.

The “international drug mafia” was one of the biggest obstacles the country was facing, he said.

“We are a government that does what it says,” Minister Rajapaksa said, referring to the vaccination programme.

There was no more room for terrorism and extremism, said Minister Rajapaksa. “Today, Sri Lanka is one of the most peaceful countries in the world.”

Yesterday’s was the 76th budget of an independent Sri Lanka. It is also the second budget of the incumbent government, and the first presented by Finance Minister Basil Rajapaksa.

The 2022 Appropriation Bill was presented to Parliament by the Minister of Finance on 07 Oct.