Budget Highlights

The  Minister of Finance and Planning Ravi Karunanayake, presenting the interim budget  2015 presented in Parliament  offered relief to all as the  government believes in uplifting and developing the lives of every citizen of this country  and not a selected few.The interim budget has proposed the following relief:

Price reduction of 13 essential goods  by removal of taxes

Salaries of state sector servants will be increased by Rs. 10,000. – Rs. 5000 to be given in February and balance in June.

 15% interest rate for Rs. 1 million of  Senior citizens with banks.

Kerosene price  reduced further by Rs. 6 per litre with immediate effect bringing down the price to Rs. 59 per litre.

As a measure to encourage alternative energy sources and to curtail government expenditure,  to install solar units in government entities whose consumption consists of a value which will provide a return on capital invested on the equipment within a period of 7 years or less.

Bus fares will be reduced by a minimum of 10% and the school van fares by a minimum of 5%.

Explaining the revenue proposals, Minister Karunanayake said: “A tax termed as Mansion Tax of Rs. 1 million will be levied on owners of all houses valued at Rs. 100 million or more or on houses above 5,000 square feet whichever is higher on an annual basis. The relevant tax would be collected on an annual basis commencing 2015 through the local government authorities. This will be in addition to local authority rates and taxes.

“A tax of 20% on  foreign exchange released to emiigrants to be taken out of the country.

“Dual citizenship option to be provided to all with a Sri Lankan origin and upon due evaluation to be granted the dual citizenship preceding the payment of Rs. 500,000 per individual request. Further, provision will be made for foreigners seeking resident status in Sri Lanka who are in a position to invest USD 10 million. All such resident status in Sri Lanka will be subjected to the approval of Defence Ministry, which will be renewed every 5 years. The visa fee will be Rs. 2.5 million for such persons.

A Super Gain Tax, which will be a one-off payment. Accordingly, any company or individual who has earned profits over Rs. 2,000 million in the tax year 2013/2014 will be liable to pay 25% of their profit. This will help reverse the ill-gotten gains of these companies back to the general public. The expected revenue from this will be Rs. 50,000 million in 2015.

“Under the present tax regime, the first Rs. 600,000 from the employment income is exempted from the Pay-As-You-Earn (PAYE) tax. In order to provide a further relief to the PAYE taxpayers, this amount is increased to Rs. 750,000 with effect from 01 April 2015.”

Pointing to the income tax concessions granted for economically backward regions, the Minister said: “The undeveloped regions in the country desperately need enhanced investments to create employment opportunities and reduce regional poverty. Hence, there is a need to encourage investors who are willing to invest those regions, which will be named by the Commissioner General of Inland Revenue. Accordingly, the profits earned under these projects will be taxed at a 50% of the normal income tax rate.”

“In order to encourage low income families to purchase a motor car to improve their living standards, I propose to reduce the taxes applicable on the motor cars with engine capacity less than 1,000 cc by around 15%. The present tax structure on motor vehicles has created an unhealthy disparity between hybrid and normal motor cars. In order to rectify this anomaly, I propose to revise the excise taxes applicable on hybrid vehicles. These changes will be implemented from mid night today.”

* Education allocation raised to 6 % of GDP

* Dual citizenship available at a huge fee

* PAYE: first Rs. 750,000 exempted from tax

* Dayata Kirula funds divided among MPs

* Rs. 1 mn mansion tax on palatial houses

The current Special Commodity levy on coriander neither crushed nor ground is Rs. 46 and that will be reduced by Rs. 20 to Rs. 26 per kilo.”

Budget Highlights:

– Loss incurred by hedging deals is 60 million USD

– Listed out details of financial losses incurred due to borrowings/developmental projects of the previous regime that has resulted in an added financial burden to the people

– True figure of debt per person is Rs. 427,220

– True figure of state debts currently it stands at Rs. 8.81 trillion

– Expenses of presidential secretariat – 2014 Rs. 10,4970 million / estimated cost for 2015 was Rs 95,930 million but it has been brought down to Rs. 2560 million

– Salaries of state sector servants increased by Rs. 10,000 – Rs. 5000 will be given in February/ remaining Rs. 5000 in June- Thereby state sector employees’ salaries increased by 47%

– All loans taken during the past government has to be paid by this government to which includes 15 million USD loan taken for security purposes

– Rs. 2.5 billion saved by cutting down on the number of Ministers

– Request made for private sector employers to increase the salaries of private sector employees Rs. 2500

– During past seven years 5000 million USD due to losing GSP+

– 50% of the loan amounts borrowed by farmers to be waived off

– An allowance of Rs. 20,000 to be paid for expectant mothers

– Senior citizens with Rs. 1 million in their bank accounts to be given 15% interest rate

– Reviewing of pensions – Increase of Rs. 1000 with effect from April

– Fresh milk price buying price to be increased by Rs.10

– To improve agricultural sector, hand tractors will be given away at concessionary rates / fertilizer concession will be continued and the quality will be increased.

– A sum of Rs. 2000 billion to be allocated to the fund reserved for kidney patients

– Budgetary allowance for education sector will be increased by 6% off the GDP systematically

– Decentralised budget for ministers will increase by Rs. 5 – 10 million

– Education allocation raised to 6 % of GDP

– Dual citizenship available at a huge fee

* PAYE: first Rs. 750,000 exempted from tax

* Dayata Kirula funds divided among MPs

* Rs. 1 mn mansion tax on palatial houses

– A sum of Rs. 2000 billion to be allocated to the fund reserved for kidney patient

– 13 Essential goods price reduction by removal of taxes – with effect from midnight

* The price of sugar will be reduced to Rs 85

* The price of milk powder has been reduced to Rs 325 (400g). The reduction is Rs 61.

* The price of Sustagen milk powder is to be reduced by Rs. 100 (400g).

* Flour, bread, green gram, sprats will be reduced by Rs 12.50 per kilo, Rs. 6, 40 per kilo, Rs. 15 per kilo respectively

* The price of canned fish is to be reduced by Rs 60 per kilo in the market while coriander and Maldive fish would be reduced by Rs 20 and Rs 200 respectively.

* Green grams – reduction by Rs. 40 per kilo

The current Special Commodity levy on coriander neither crushed nor ground is Rs. 46 and that will be reduced by Rs. 20 to Rs. 26 per kilo.”

Furthermore, price of a 12.5kg cylinder of gas would be reduced up to Rs. 1,596 which is a reduction by Rs. 300.

– Gold jewellery pawned to banks – that don’t exceed Rs. 200,000 – interest will be waived off

– 12.5kg gas cylinder price reduced up to Rs. 1596 (Rs. 300 reduction)

– Vehicle taxes reduction 15% (for vehicles with engines below 1000 CC)

– SriLankan Airlines and Mihin Lanka to be merged to reduced the losses