LBO Home IndoChina | About Us | To Advertise | Contact Us rss LBO Mobil rss rss rss rss rss
Sanga, only Sri Lankan player in the 2015 ICC world cup team | Australia won 2015 Cricket World Cup with a 7 wicket victory over New Zealand | Facebook to focus on three themes in 2015: Zuckerberg | Sri Lanka’s President Sirisena calls for a new thinking on Asian growth strategy | Sri Lanka to ease entry barriers for FDI: Ravi Karunanayake | Sri Lanka new rulers to get Chinese support | Sri Lanka sells $100mn of 5 year development bonds; rejects all bids at 2 and 3 years | Fitch affirms HSBC Sri Lanka branch at 'AAA(lka)'; outlook stable | Sri Lanka Freedom Party yet to decide a disciplinary action who participated pro-MR rally | Sri Lanka's President appoints a new law commission | Sri Lanka’s NDB-DFCC merger awaiting new regime’s go ahead | Ultra small computer by Intel; first look in Sri Lanka | Sri Lanka's micro-finance sector to access CRIB through a new regulation | Sri Lanka to get Chinese funded hospital for kidney patients; China to support SL on alleged human rights issues | Sri Lanka Siyapatha Finance PLC rated 'A(lka)' with a stable outlook : Rating agency | Sri Lanka’s AMW Capital Leasing and Finance upgraded to 'BBB+(lka)' : Fitch Ratings                                          
Tue, 31 March 2015 02:26:30
Budget 2006 - Where does it all stand?
08 Dec, 2005 00:00:00
Sri Lanka Thursday announced higher taxes on corporates, gambling, smoking and liquor to fund a spending spree that includes farm and electricity subsidies and jobs for unemployed.
Sri Lanka Thursday announced higher taxes on corporates, gambling, smoking and liquor to fund a spending spree that includes farm and electricity subsidies and jobs for unemployed.

President Mahinda Rajapakse, who is also the countrys Finance Minister, unveiled the 2006 budget granting salary increases to public servants and duty-free allowances to help professionals who return from abroad, to start up their own business.

The budget deficit for 2006 was estimated at Rs. 197 billion, up from Rs. 168 billion this year.

The deficit would widen to 7.1 percent of gross domestic product from an estimated 8.5 percent this year, he said.

Rajapakse estimated next years total revenue at Rs. 484 billion, up Rs. 7 billion from the Nov. 8 budget estimates.

Next years total spending is estimated at Rs. 731 billion, up by Rs. 10 billion from the budget proposals presented a month ago.

The government has also cut its domestic borrowings plan by Rs. 1.0 billion to Rs. 122.9 billion from the previous estimates.

However, foreign borrowings are expected to increase by Rs. 6.9 billion from a month ago. Total net foreign borrowings for 2006 have been estimated at Rs. 66.4 billion.

He said the thrust of governments programme is to increase economic growth to eight percent in the medium-term and spend on poverty alleviation, health, education and infrastructure projects.

A large chunk of government expenditure for 2006, will go towards incentives for agriculture sector, higher fertilizer subsidy for farmers and subsidies on construction imports.

In keeping with his elections manifesto, Rajapakse raised the fertilizer subsidy to Rs. 8.5 billion. His incentives for agriculture, on the other hand will cost another Rs. 7.7 billion next year.

A further billion rupees will be splashed to hire 10,000 new civil servants next year.

Power supply will be subsidized for those living near upcoming coal power projects.

The electricity will be provided at half rate to the people living in the districts where new coal power plants are installed, he said. Religious places in those districts will be given electricity free of charge.

The bulk of his welfare heavy spending plans will be funded through an overseas bond issue and higher taxes.

Higher excise duties on alcohol and tobacco are expected to generate an additional Rs. 4.7 billion next year.

The budget raised the overall corporate tax to 35 percent, while tax for newly quoted companies has been hiked to 33.3 percent.

Value-added tax on financial services will be increased to 20 percent from the present 15 percent.

Personal income tax rate for the high-income group will also go up to 35 percent from 30 percent.

The budget announced plans to issue three-five year dollar bonds to over a million Sri Lankans living and working overseas.

Rajapakse also announced that Standard & Poor had given Sri Lanka a B+ sovereign rating and Fitch a BB-.

Financial analysts expect the government to use the credit ratings to sell its maiden bonds in the international markets next year and also set a benchmark for local companies.

-Mel Gunasekera:

Your Comment
Your Name/Handle
Your Email (Your email will not be displayed)
Your Email
Receivers Email
Your Comment