2019 budget to entice rural masses, middle class
As Finance Minister Mangala Samaraweera gets ready to deliver the government’s 2019 budget in Parliament on November 5, ahead of provincial council and Presidential elections, speculation is rife that the budget may be more rural and middle class-centric focusing on giveaways to the middle class, farmers and the poor.
Amendments to the Finance Act have already been gazetted paving the way to implement populist budget proposals with effect from January 1 2019, a senior Treasury official told the Business Times.
The middle class is likely to get some relief in the budget which is expected to reflect a please-all strategy.
Treasury officials are working on various combinations to determine the proper mix ensuring that the tax burden is eased for the benefit of the middle class; a senior official said adding that the new taxes will not be unreasonable for them.
Sri Lanka’s low and middle income earners will have to pay less income tax with wider tax exemption limit and lower rates, but higher income earners will be directed to pay more with the maximum rate moving up under the 2019 budget proposals.
A new 7 per cent ‘Debt Repayment Levy’ on financial institutions will be charged every month, on the value addition attributable to the supply of financial services by these institutions. Another tax will be imposed on every bank transactions at a minimum of Rs. 10,000 while the Annual Company Registration Levy will be charged on companies registered under the Companies Act No. 7 of 2007.
Finance Ministry is also considering a proposal made by Sri Lanka Gems and Jewellery Association to reduce import duty to 5 per cent from 15 per cent, he disclosed.
Cess will be removed from 253 items under specified harmonized system (HS) codes facilitating the emerging sectors namely, tourism, pharmaceuticals, value adding industries (such as cement, aluminum, etc.) and other industries (such as specialiszed food items).
According to the Appropriation Bill estimates, the total expenditure for 2019 without budget proposals is Rs. 4.37 trillion. A further Rs. 2,088 billion has allocated for public expenditure, to cover expenses authorised by special laws, to be charged on the Consolidated Fund such as Public Debt servicing.