Friday, January 30, 2015

Funds for education upped to 6% of GDP







By Sanath Nanayakkare

'The economy is in a sad state, but the good news is it can be resurrected by taking immediate and innovative steps to reduce the massive budget deficit, Finance Minister Ravi Karunanayake said presenting the Interim Budget for 2015 in parliament yesterday.

Proposing funds allocated for Education be increased to 6% of GDP, and those for Public Health Service be increased to 3% of GDP, Karunanayake stipulated a Super Gain Tax for organizations that record a profit of over Rs. 200 million.

"We have to bear the burden of all the loans taken by the previous administration. Total debt of the country is over Rs. 8800 billion," Karunanayake told parliament.

Commenting on the aviation sector, the Finance Minister said," Sri Lankan Airlines losses over the past 5 years were Rs 100bn. Mihin Air losses over the same period were Rs. 15bn. The two airlines will be merged to increase productivity."

Another key proposal made by him was the introduction of solar power to national power generation.

Stimulating interest in Sri Lankan consumers who increasingly make electronic payments, the Finance Minister declared that credit card interest rates would be reduced by 8%.

Reminding the public of the new government’s comments on the palatial houses in the country, the Finance Minister said that a new Palace Tax would be imposed, payable annually.

Referring to self-employed people, he said a pension scheme would be proposed for them.

Making a connection to a much debated issue in the past which hit headlines in all newspapers, the minister proposed a one-time tax of Rs. 1000 million to be paid by anyone who owns casinos before April 2015.

Easing the minds of people looking to buy their first car or their first hybrid car, the minister said, "Taxes imposed on vehicles less than 1000 CC to be reduced by 15%, and taxes imposed on hybrid vehicles will also be reduced. Also, state owned vehicles which are not being used will be sold at an open auction."

Making an impact on the construction industry as well as individual citizens, tax on cement is to be reduced by 7.5%.

Certified price for a litre of fresh milk is to be increased by Rs.10 benefiting dairy farmers, and the fertilizer subsidy will be continued to aid paddy farmers.

Certified prices for tea and rubber would also be increased according to another budget proposal.

Referring to Sri Lankans who migrate to another country, the minister said they would all be liable to pay an exit tax.

Salaries of government workers will increase by Rs. 10,000.  Of this, Rs. 5,000 will be paid from February. Balance Rs. 5,000 will be added from June, while pensions are to increase by Rs. 1000 from April 2015.

A number of other populist proposals include; the reduction of prices of 13 food items, Rs. 20,000 allowance for pregnant mothers, a substantial reduction in the marriage registration fee and the cut-off of interest on gold- backed loans (not more than Rs.200,000) at state banks.

"We are planning to revitalize the apparel sector in the country. We will work towards lifting the ban imposed by the EU on Sri Lankan tuna imports, he said.

The general public will be watching with some trepidation as to what the Finance Minister’s ‘innovative steps’ would be like, in reducing the massive budget deficit, as he mentioned at the beginning of his speech.


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