BUDGET 2019

Budget 2019: Finance Ministry to boost revenue by 17% of GDP
6 January, 2019


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Finance Minister Mangala Samaraweera has said that Budget 2019 is aimed at increasing government revenue by more than 17% of GDP
* Extra focus on public spending
* CB confident of debt obligation

Economists, Chamber heads and Financial analysts in their expectations of the forthcoming budget, said the Budget should focus on Fiscal consolidation maintaiingn the recurrent and capital expenditure which are key factors to curtail the budget deficit.

Professor of Economics, University of Colombo, Sirimal Abeyratne said the country has issues regarding tax revenue since the government has been taking measures to increase tax revenue, which are not yet completely in place. Therefore, there would be certain loopholes in revenue collection.

The tax collection process was disrupted following the political turmoil in October last year and now tax-payers may be asking why should they pay taxes when politicians act irresponsibly. There were issues on the part of tax expenditure triggered by the political drama in October, as it supported making certain irregular proposals for handouts which may have resulted in an increase in government expenditure.

“Put together, tax collection and expenditure problem, there will be a budget deficit which will be reflected in the March and year-end budgets,” Prof. Abeyratne said, adding that the economic performance in the country has been far short of expectations considering the economic growth rate and growth in exports. He said fiscal management is in disarray and added that serious attempts should be made to achieve fiscal consolidation.

President, National Chamber of Commerce of Sri Lanka, Sujeiva Samaraweera said there should be greater attention paid on promoting value-added exports selecting three sectors which will help the country to concentrate on them.

He said driving innovation will be a key element to stay in the game and without a new product range the country will be behind others in the global market. Innovation will help bridge the import-export gap that has been widening over the years. Nothing could be sustained without care for the environment.

The Cabinet decided last week to present the Budget for 2019 in early March. The Appropriation Bill which is currently being prepared aims at increasing government revenue by over 17 per cent of GDP, reducing recurrent expenditure to 15 per cent of GDP, maintaining investments at 5.5 percent, slashing the budget deficit to 3.5 per cent of GDP and maintaining government debt at 70 per cent of GDP. The Appropriation Bill which was to be presented on November 5 was delayed due to the Constitutional crisis.

A Government official said the March Budget will focus more on public spending. Sri Lanka is in a position to repay the massive debt obligation during this year, according to the road map presented by the Central Bank Governor Dr. Indrajit Coomaraswamy.

President, National Chamber of Exporters, Ramal Jasinghe said, “We are also confident that with a correct mechanism and correct strategies, the debt obligation could be met.”
The year’s debt obligation stands at US $ 5 billion and this should be serviced without creating a burden on the people, he said.

“The export sector could support the country’s development with a continuous drive to enhance export value and volumes. As we have achieved the targets set for last year despite political unrest in the last quarter, reaching this year’s target will not be an issue. We are expecting a 17 percent increase in exports this year and are confident of achieving it,” Jasinghe said.

However, the industrial sector recorded a dip. “We could take measures to increase the performance due to the resilience nature and move on. Along with the Balance of Payment and debt servicing we are optimistic that the increase in export performance in this process is vital as the country’s debt is high.

The cost-of-living has gone up as inflation in November shows an increase.
However, it is stabilising and will reach a mid single digit inflation regime.
The basket of goods consumed by the middle class may be different from the goods that the Central Bank is considering.
The inflation figure of 2-3 percent indicated by the Central Bank in reality may be different from what is in operation, he said.
There is a drop in motor vehicle registration due to the increase in the duty applicable. The move was to correct the BOP discrepancies.

“We are concerned that the upcoming budget will be a populist budget with more hand-outs. However, we need to be careful to protect long-term robust economic growth. We underline this need as a Chamber as we have to be cautious to make a balance between the people’s expectations and the country’s forward march.
“We expect the budget to be export-friendly in nature and effect tariff and taxes to enable its growth. Consideration should be given for an accelerated export drive.
“One of the concerns is the demurrage and certain steps should be taken to address this issue as exports and imports are becoming more expensive due to this.

“It is necessary to ensure ease of trade to drive exports,” he said. 

http://sundayobserver.lk/2019/01/06/business/budget-2019-finance-ministry-boost-revenue-17-gdp

Carbon tax imposed on vehicles
10 January 2019​​​​​​​

• Electric vehicles exempted, charges to be collected when issuing revenue license 
  

A carbon tax has been imposed on motor vehicles with effect from 1 January and will be charged from all except electric vehicles, according to the Commissioner General of Motor Traffic. 

A carbon tax is a tax levied on the carbon content of fuels. It is a form of carbon pricing. Carbon is present in every hydrocarbon fuel (coal, petroleum, and natural gas) and converted to carbon dioxide. The carbon tax will not be mandatory this year but will be from 2020. When the revenue license is given in 2020 the charges for both years will need to be paid.  

“The tax will be charged under the 2018 Financial Act and under three categories -- the manufacturing year of the vehicles of less than five years, between five and ten years and more than ten years,” the Commissioner said. 

“Hybrid vehicles using petrol or diesel and based on their engine capacity with a manufacture date of less than five years would be charged 25 cents for one cubic centimetre, between five and ten years 50 cents and more than ten years Rs. 1.00.”

Diesel or petrol vehicles with a manufacture year of less than five years would be charged 50 cents and between five and ten years Rs. 1.00 and more than ten years Rs. 1.50 or one cubic centimetre according to the engine capacity.

Passenger transport buses with a manufacture year of less than five years will be charged Rs. 1,000, between five and ten years, charged Rs. 2,000 and more than ten years Rs. 3,000.

Charges would be made through the provincial DMT commissioners when obtaining the revenue license.

http://www.ft.lk/front-page/Carbon-tax--imposed-on-vehicles/44-670551

ruwan326 wrote:Carbon tax imposed on vehicles
10 January 2019​​​​​​​

• Electric vehicles exempted, charges to be collected when issuing revenue license 
  

A carbon tax has been imposed on motor vehicles with effect from 1 January and will be charged from all except electric vehicles, according to the Commissioner General of Motor Traffic. 

A carbon tax is a tax levied on the carbon content of fuels. It is a form of carbon pricing. Carbon is present in every hydrocarbon fuel (coal, petroleum, and natural gas) and converted to carbon dioxide. The carbon tax will not be mandatory this year but will be from 2020. When the revenue license is given in 2020 the charges for both years will need to be paid.  

“The tax will be charged under the 2018 Financial Act and under three categories -- the manufacturing year of the vehicles of less than five years, between five and ten years and more than ten years,” the Commissioner said. 

“Hybrid vehicles using petrol or diesel and based on their engine capacity with a manufacture date of less than five years would be charged 25 cents for one cubic centimetre, between five and ten years 50 cents and more than ten years Rs. 1.00.”

Diesel or petrol vehicles with a manufacture year of less than five years would be charged 50 cents and between five and ten years Rs. 1.00 and more than ten years Rs. 1.50 or one cubic centimetre according to the engine capacity.

Passenger transport buses with a manufacture year of less than five years will be charged Rs. 1,000, between five and ten years, charged Rs. 2,000 and more than ten years Rs. 3,000.

Charges would be made through the provincial DMT commissioners when obtaining the revenue license.

http://www.ft.lk/front-page/Carbon-tax--imposed-on-vehicles/44-670551

http://www.ft.lk/front-page/Carbon-tax--imposed-on-vehicles/44-670551[/QUOTE]



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Several income categories exempted from Withholding Tax

January, 10, 2019

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Taking into consideration the requests made by different parties, the proposal made by Hon. Mangala Samaraweera, the Minister of Finance & Mass Media to amend the Inland Revenue Act, No.24 of 2017, to exempt the Withholding Tax imposed on the Interest Income of the children's savings, Earnings from the Government Securities, Interest on loans of non residents, Royalty, Leasing of Air crafts and to reduce the tax percentage on Withholding Tax on rent, was approved by the Cabinet.

​​​​​​​http://bizenglish.adaderana.lk/several-income-categories-exempted-from-withholding-tax/