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Five-year income tax exemptions for agriculture, livestock, and fisheries sectors

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Budget for next year presented under COVID siege

* Special Tax Appeals Court to resolve tax issues expeditiously

* Rs 500,000 start-up capital loan with 5-year grace period for entrepreneurs

* A sports economy worth USD 1,000 Mn from 2021-2024

* New city universities in each district

* Rs 8 Bn for technology enhancement

* Rs. 250 mn to develop temples in villages

* Extra Rs. 2 per dollar sent by Lankans employed overseas

* Two LNG plants, one coal plant to produce 1,000MW

* Sustainable and renewable energy supply by 2023

* Rs.15 billion for expanding mobile, fixed broadband

* An additional provision of Rs. 20,000 mn for the tri-forces

* Allocation of Rs 750 mn for activities of Rana Viru Seva Authority

* 5.5% economic growth rate for 2021 expected

* 4% budget deficit goal to be achieved by 2025

 

By Saman Indrajith

Prime Minister Mahinda Rajapaksa in his capacity as the Minister of Finance presented the 75th budget of the country, spelling out measures and proposals to achieve poverty alleviation and economic revival.

The budget proposals aimed to support the two year medium term programme of poverty alleviation and economic revival outlined for 2021-2023 in the “Vistas of Prosperity and Splendour’, the Prime Minister said.

“The expected economic growth rate for 2021 is 5.5 percent. I emphasise that it is our medium term vision to reduce the budget gap through increasing the economic growth up to 6% and increasing the government revenue from its current level of 9.7% to 14.1%. By 2025, the budget deficit is expected to be 4% of the GDP due to growth in tax revenue through the expansion of the economy and the trust placed on the management of public expenditure and public enterprises.”

Prime MinisterRajapaksa commenced delivering the budget speech around 1.44 pm. It continued till 4.54 pm including a half-an-hour tea break between 2.43 to 3.24.

Income tax exemptions have been proposed for agriculture, livestock, and fisheries sectors for five years. In addition, a 50% income tax exemption has been proposed for local companies if get listed in the Stock Market before December 31, 2021.

He proposed to establish a special Tax Appeals Court to facilitate the resolution of tax appeals without delays, Prime Minister Rajapaksa said.

“I propose to simplify the Taxes on Capital Gains, where such taxes will be calculated based on the sale price of a property or the assessed value of a property whichever is higher. I propose to exempt the tax on dividends of foreign companies for three years if such dividends are reinvested on expansion of their businesses or in the money or stock market or in Sri Lanka International sovereign bonds.”

The PM also noted that the government intended to bring necessary changes to the Inland Revenue Department (IRD) in order to increase the self-compliance of taxpayers and to strengthen tax audits as well as to increase tax revenues.

The Premier went to propose enforcing necessary legal provisions that enabled the cancellation of private tax consulting services that aid and abet issuance of forged tax reports.

A loan of Rs 500,000 as start-up capital with a grace period of five years would be introduced for entrepreneurs. A commitment fee of 0.25 per cent proposed to be levied from loan applicants to ensure that the funds are managed and utilized accordingly.

Prime Minister Rajapaksa proposed to allocate additional funds of Rs. 3,000 million to initiate a scholarship programme to provide Rs. 4,000 monthly allowance each to students receiving vocational education based on their active participation.

Technical colleges of which the annual intake is presently at 100,000 would be increased to 200,000 students per year, he said. A five-year-grace period for tax levied from Vocational Training Centres, which were able to double their annual intake of students, was proposed. Rs. 10,000 million would be allocated from the budget next year for new technical colleges to be established in Colombo, Kalutara, Kandy, Anuradhapura and Batticaloa. New city universities would be established in each district to cater to students pursuing popular subjects.

The PM proposed to create a sports economy worth USD 1,000 million during the period 2021-2024. For that purpose Rs 1000 million was proposed to be allocated from the budget. He proposed measures to increase female participation in national sports.

It was proposed to increase production of milk to meet local demand and a Rs. 500,000 loan will be provided for purchasing cows and meeting other dairy farm requirements. The Premier said that $300 million in foreign exchange was annually needed for milk imports and proposed to reduce that by $55 million by encouraging local milk production.

Prime Minister Rajapaksa proposed to allocate Rs. 750 million for the welfare of disabled armed forces personnel.

He proposed to allocate additional funds of Rs. 250 million to develop basic infrastructure of temples in rural areas.

The Budget proposes to allocate Rs. 8 billion for technology enhancement next year. In addition, allocation of Rs.15 billion for expanding mobile, fixed broadband under the “Gamata Saniwedanaya’ scheme was proposed. State land would be given to the Telecommunications Regulatory Commission for the proposal, the PM said.

The Prime Minister said that low-income women migrated for work and their remittances had strengthened the national economy. In a bid to increase annual remittances from migrant workers to over US$ 7 billion, he proposed to pay extra two rupees for every dollar sent by Lankans employed overseas. That was in addition to prevailing exchange rates; he said, assuring to implement a contributory pension scheme for Lankan foreign employees.

It was proposed to expedite the construction of the national expressway network and extend the Marine Drive to Moratuwa. Prime Minister Rajapaksa said a three-year programme to develop road infrastructure in the 25 districts would be introduced. Rs 1,300 million proposed to be allocated to improve the railway network including the extending of Colombo and Kelani Valley track.

Electricity consumers were assured of a sustainable and renewable energy supply by 2023.

The PM said that 70 per cent of the country’s energy supply would be obtained from renewable energy sources by 2023. The Lakvijaya and Kerawalapitiya Power Plants would be strengthened to guarantee interruption-free power supply through years 2021-2022. One coal-fired power plant of 300 MW and two LNG plants would set up. The Kerawalapitiya plant would be transformed into an LNG plant, the PM said, proposing to provide solar panels of 5 kilo watts each to 100,000 houses of low income families under an Asian Development Bank and Indian loan scheme. Loan of 4% interest rate would be provided to low income families for this purpose, he said.

Reforms were proposed for the Foreign Service and under the new reforms bilateral agreements would be reviewed to ensure national security and Sri Lanka’s non-aligned stance, the Prime Minister said, adding that under those reforms a new mechanism would be introduced to assess the efficiency and effectiveness of diplomats and foreign service officers.

“With the aim of ensuring national security, a medium term plan to enhance the professional skills of the heroes of our tri-forces, providing them with modern technological facilities is currently being prepared. In the context of resource constraints and identified priorities in the country, further strengthening of the Sri Lanka Navy has been given priority. We must combat the drug menace and must eliminate it to prevent our country becoming a hub for international illicit drug trade. The government expects to ensure that the investments will facilitate to control smuggling of goods, providing the required protection for the fishery resources and fishery communities and establishing a safe environment for carrying out tasks in the Indian Ocean.”

The PM proposed to allocate Rs. 20,000 million as an additional provision for the tri-forces to fulfill the basic requirements identified in the medium-term and long-term planning frameworks in accordance with their basic requirements.

He also proposed to allocate Rs.750 million for the activities implemented by the RanaViru Seva Authority, including the provision of medical aid, support for development enterprises, conducting of educational and vocational development programmes, housing loans and provision of supporting equipment for the disabled war heroes targeting, the retired and disabled war heroes of the tri forces, police and the civil defense force and the dependents of the families of those heroes have laid down their lives.

The Premier proposed an additional allocation of Rs. 2,500 million, to address special programmes aimed at strengthening public security. “The government has given special attention to strengthening the police so as to assure public security. We must consolidate the environment for all citizens to live freely without any fear. Resources will be allocated to support the control of the drug menace, to regulate vehicles and traffic rules, strengthening Tourist police, special training and provide the necessary facilities to prevent crimes and robberies. It is also proposed to expand the police patrols to ensure public safety by deploying special police vehicles.”

Prime Minister Rajapaksa proposed the implementation of a special loan scheme for public servants to obtain solar powered electricity. “When appointing or transferring public servants, it is proposed to ensure that such postings are made giving preference to the districts of residence. Permission will be granted for non-executive office employees of the public service to engage in other jobs or employment after office hours and those who seek foreign employment will be granted leave for two years. I propose to reduce the maximum interest charged on housing and property loans of public servants granted by banks under housing loans and advances up to a maximum of 7 per cent.”

The PM said: “The estimated Government Revenue for 2021 is Rs. 1,961 billion. The total Government expenditure is Rs. 3,525 billion and as such the difference between the revenue and the expenditure is Rs. 1,564 billion. It is planned to maintain the budget gap at 9 percent of the GDP since the private investments which amounted to 32.3 percent of the GDP in 2014 has decreased up to 27.6 percent in 2019 and since it is required to provide a robust start by the government to revive the economic growth which had stagnated recently.”

The second reading debate of the budget is scheduled to commence today (18) and continue till Nov 21. The vote on the second reading will take place at 5 pm on Nov 21. Parliament sittings will be held from the 18th to the 20th from 9.30 am to 5.30 pm. The debate of the Committee Stage will commence on Nov 23 and is scheduled to conclude on Dec 10. The final vote on the budget is scheduled to be taken at 5.00 pm on Dec 10.



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No-confidence motion against Justice Minister should be supported by facts as members’ noise does not establish facts – PM

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“Our mandate is to establish the rule of law and restore respect and confidence in Sri Lanka’s justice system”

Prime Minister Dr. Harini Amarasuriya made these remarks in Parliament on Friday [July 24]  while pparticipating in the parliamentary debate on the no-confidence motion against the Minister of Justice and National Integration, the Prime Minister emphasized that the Opposition had failed to substantiate its allegations with facts and had instead relied on rhetoric and personal attacks.

The Prime Minister further stated,

“There is no doubt that the incident that occurred on 5 and 6 July was tragic, and the loss of life is unacceptable. It is not something that can be accepted or condoned in any way.

Members of the Opposition must establish, through evidence and facts, how exactly the Minister of Justice and National Integration is solely responsible for what happened, and how his conduct before, during and after the incident amounted to a breach of trust. Noise, personal attacks, venom and rhetoric do not establish facts.

What we are hearing today is a distortion of the truth, misrepresentation of facts, half-truths at best, and a deliberate effort to viciously attack a member of the Cabinet. That does not establish the intent of this no-confidence motion.

The Prime Minister further noted that many of the structural deficiencies within the prison system predated the current administration and had remained unresolved for years.

She noted that longstanding vacancies in the prison service had persisted since 2022 but that the present Government had taken steps to address them.

“During the past year, 695 prison guards have been recruited, a further 190 recruitments are underway, and 18 Assistant Superintendents have been appointed. This is the first time since 2022 that these vacancies have begun to be filled.”

The Prime Minister further emphasized that the reforms undertaken to strengthen the Government Analyst’s Department, including filling vacancies, allocating funds for essential equipment, initiating procurement processes, and reviewing procedures to improve efficiency.

Addressing the need to ensure that the numbers of people in the remand are reduced , the Prime Minister stated legal reforms were already in progress, including amendments to the Poisons and Dangerous Drugs Act, which will soon be presented to Parliament. The Prime Minister stated that, “It is not that the Minister has failed to address these issues. Law reform does not happen overnight. It requires due process, and those processes are well underway.”

The Prime Minister also outlined measures taken by the present Minister of justice and national integration to improve prison conditions, including expanding healthcare services for prisoners and prison staff in collaboration with the Ministry of Health, introducing inpatient and specialized medical services, appointing new healthcare personnel, and improving access to treatment.

In addition, she highlighted rehabilitation initiatives aimed at reducing reoffending, including community rehabilitation programmes and vocational training to equip prisoners with employable skills upon release.

Reaffirming the Government’s commitment to comprehensive justice sector reforms, the Prime Minister further stated,

“Our mandate was to establish the rule of law and restore respect and confidence in Sri Lanka’s justice system.”

Prime Minister Dr. Harini Amarasuriya emphasized that the Government inherited a justice system that had been weakened by years of systemic corruption, institutional inefficiencies, and longstanding structural shortcomings. The Prime Minister further stated,

The task of cleaning up  such a  corrupted system is not easy. This incident is also needed to understand in that particular context of how the prison system was operated in the past It is this corrupted system that the Minister has been entrusted with the responsibility of cleaning up. This involves investigation within the Institution itself. It is not a easy task. This government has undertaken this difficult challenge.

It is very clear that this opposition so far will not be able to establish any facts that support the motion that they have brought forward. This is rhetorical exercises. This is not about justice system. This is another cheap effort by the opposition to get attention and part of a push back against the very reforms the government and the ministry has been undertaken”.

[Prime Minister’s Media Division]

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Develop a programme to allocate underutilised state land for investment by returning migrant workers – President

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President Anura Kumara Dissanayake has instructed the relevant authorities to formulate a programme to allocate underutilized land, together with the necessary project support services, to Sri Lankan migrant workers returning home upon the completion of their overseas employment.

The President issued these instructions during a discussion held on Friday  (24) afternoon  at the Presidential Secretariat to review the progress of projects implemented under the 2026 budget allocations for the Ministry of Plantation and Community Infrastructure and to consider the Ministry’s proposals for the 2027 Budget.

The meeting included a comprehensive review of the progress of development projects being implemented by the Plantation Sector, the Community Infrastructure Sector and institutions under the State Plantation Companies operating within the Ministry. Discussions also focused on priorities, funding requirements and planned initiatives for 2027.

The meeting also reviewed key plantation sector initiatives being implemented under capital allocations of Rs. 1,081 million, including the estate land surveying programme, the disease management of coconut, the Kapruka Fund, initiatives to increase coconut production and the Northern Coconut Triangle Programme.

President Dissanayake also assessed the progress of ongoing infrastructure development programmes in the plantation sector. The President emphasised the importance of completing the project to construct 10,000 houses for the Malayagam community within the stipulated time-frame and handing them over to the beneficiaries without delay.

The President further noted that weaknesses in the implementation mechanisms for projects financed through foreign grants and loan assistance had resulted in certain allocated funds remaining underutilised or being returned.

President Dissanayake also reviewed the progress of the relief programme implemented to support the replanting of plantation crops, including tea, coconut and rubber that were damaged by the Ditwah disaster situation.

It was revealed during the discussion that the tea, coconut, rubber, cashew and palmyrah sectors, along with plantation infrastructure development activities, have recorded growth and improved profitability this year compared to the previous year. In particular, six state plantation companies, including Elkaduwa Plantations Limited, Kurunegala Plantations Limited, Chilaw Plantations Limited, Sri Lanka State Plantation Corporation, Janatha Estates Development Board and Kalubowitiyana Tea Factory Limited, are making significant progress in increasing their profitability.

Special attention was also given to crop production and related crop improvement programmes implemented by the Tea Research Institute, research and development activities and initiatives launched to support the replanting of smallholder tea plantations.

It was revealed during the discussion that approximately 60,000 hectares of Sri Lanka’s tea cultivation consists of smallholder tea plantations. Of the Rs. 450.06 million allocated in the 2026 Budget for the replanting of smallholder tea plantations, Rs. 155.07 million has already been utilised.

President Dissanayake also reviewed the progress of the 500 Tea Villages Programme implemented under the Tea Small Holdings Development Authority and instructed officials to expedite its completion by integrating the initiative with other rural development programmes, such as “Prajashakthi”, being implemented at the grassroots level.

The meeting also discussed the programme to revitalise rubber cultivation, including the allocation of Rs. 137 million in the 2026 Budget for the Rubber Research Institute, as well as the progress of rubber replanting initiatives and the challenges encountered during implementation.

In addition, discussions focused on the progress of programmes and research activities aimed at developing the coconut industry, enhancing productivity in coconut plantations, promoting new product development, increasing value addition and improving product quality.

The progress of programmes implemented under the Palmyrah Development Board and the Kithul Development Board to strengthen the palmyrah and kithul industries was also reviewed during the discussion.

It was revealed that Sri Lanka is expected to meet 18,000 metric tonnes of its annual cashew requirement of 25,000 metric tonnes this year, marking a significant increase compared to the previous year. The meeting also discussed the potential to expand cashew cultivation across approximately 15,000 hectares in the Northern and Eastern Provinces.

The progress of ongoing efforts to consolidate institutions within the plantation sector and the implementation of Cabinet decisions relating to non-commercial government-owned institutions were also reviewed. The meeting further discussed the need to update agreements entered into by previous governments when allocating lands to companies. Emphasising the importance of establishing stronger agreements regarding State-owned land allocations, President Dissanayake instructed that a committee be appointed through the Ministry of Finance to examine and address these matters.

The President also instructed officials to explore the possibility of offering courses conducted by the National Institute of Plantation Management through universities, in consultation with relevant higher education institutions.

Among those present were Minister of Plantation and Community Infrastructure Samantha Vidyarathna, Minister of Labour and Deputy Minister of Finance and Planning Anil Jayantha Fernando, Deputy Minister of Plantation and Community Infrastructure Sundaralingam Pradeep, Secretary to the President Dr. Nandika Sanath Kumanayake, Chief of Presidential Staff Prabath Chandrakeerthi, Senior Additional Secretaries to the President Russell Aponso and Kapila Janaka Bandara, Secretary to the Ministry of Finance, Planning and Economic Development Dr .Harshana Suriyapperuma and Secretary to the Ministry of Plantation and Community Infrastructure Gunadasa Samarasinghe. Chairpersons, Director Generals and senior officials of institutions under the Ministry of Plantation and Community Infrastructure also participated in the discussion.

[PMD]

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New Chairman and Members appointed to Delimitation Commission

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President Anura Kumara Dissanayake has appointed M. K. Saman Sri Ratnayake as the new Chairman and a member of the Delimitation Commission.

M. B. Rohana Pushpakumara and K. Thavalingam have been appointed as the other members of the Commission.

The relevant letters of appointment were presented to them by Secretary to the President Dr Nandika Sanath Kumanayake at the Presidential Secretariat on Friday  (24) afternoon .

The appointments have been made to fill the vacancies that arose following the expiry of the terms of office of the members of the Delimitation Commission.

[PMD]

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