Sri Lanka Budget 2016 aims to incentivise middle class
View(s):The Government, keen to win the hearts of Sri Lanka’s middle class numbering over 18.5 million, is expected to provide concessions for them, incentivising their savings and offering relief from the upcoming 2016 budget, official sources said.
Prime Minister Ranil Wickremesinghe has directed the Finance Ministry to submit a detailed report on incentives and concessions that could be given to the middle class from the 2016 budget.
Finance Minister Ravi Karunanayake has been directed to advise top Treasury officials to prepare the budget by giving relief to the middle class. The report is to be handed over to the Prime Minister considering it as very urgent, a senior government official told the Business Times. The 2016 budget is to focus attention on promoting import substitution curtailing the import of food items providing more concessions for agriculture industry.
Sri Lanka is currently spending Rs. 200 billion annually for importing major food items, that can be locally produced in a good quality that are free of contaminants. Animal products and fisheries products can also be increased. Therefore, a National Programme on Food Production will be implemented with the contribution of all the ministries and institutions at an estimated cost of Rs. 15,595 million.
With the aim of containing the budget deficit to 5.5 to 6 percent of the GDP, the government plans to raise revenue via introducing new taxes and expanding the tax base, controlling state expenditure and making subsidies only for the needy and the poorest of the poor in the forth coming budget, he revealed.
The government will also introduce a simple taxation system by removing various taxes and introducing few taxes.
Corrective measures will be taken in the budget for the drying up of foreign reserves due to the increase in vehicle imports.
Overhauling Sri Lanka’s tax system, tackling loss making state-owned-enterprises, improving labour market efficiency, filling skill gaps in the workforce, improving productivity of agriculture, delivering a better safety net to the poor and vulnerable, are amongst a raft of reforms that need attention of the government, the sources said.
The ministry has already received over 1000 proposals to be included in the 2016 Budget from the people, institutions and organisations. The Finance Ministry would consider the relevant proposals under 10 broad segments. The Treasury is also considering a proposal submitted by Sri Lanka Footwear and Leather Products Manufactures Association for the benefit of the industry to impose a duty rate of 30 percent or Rs. 50 per pair of shoe uppers and Cess of Rs. 250 per pair of imported shoes.
The association requested the government to introduce an Export Incentive or Export Rebate Scheme of 5 per cent to encourage the local exporters. The Lanka Confectionery Manufacturers Association in its budget proposal urged the Treasury to direct the Sri Lanka Customs to calculate the import duty based on the Retail Price instead of the CIF price for confectionery imports to protect the local industry.