What a strange budget. Broadly they are taxing the rich and giving stuff away to the poor. There are a lot of one-time taxes (wut?) on big companies, taxes on people with big houses, vehicle importers, etc. At the same time, prices of a lot of consumer goods are reduced, salaries are increased for government workers, hand tractors will be given away, seniors/veterans/mothers are given benefits, etc.
This is the most populist budget I could imagine, and it’s coming from the UNP. For reference, this would be like the Republicans taxing oil companies and going crazy over health care in 10 years.
This interim budget is also different from Mahinda’s budgets in that he gave a lot of stuff away without paying for it at all. This is the first budget I’ve seen where there are significant steps to gain revenue. Those steps, however, are pretty intense and some are on such short notice that it’s not really good for business.
I’m categorizing the stuff reported in the Daily Mirror’s liveblog which, however, is full of typos and I think some number errors.
Tell me if you can find a better comprehensive source. The full interim budget is available via the Treasury Government website (PDF).
Taxing The Rich
Previous budgets (see PDF of Mahinda’s 2015 budget) have been full of the same populist giveaways, but they haven’t done anything painful to actually, you know, balance the budget. Mahinda would usually increase taxes on cigarettes, tobacco and gambling (ie, stuff that no one is going to defend). This budget actually hits some major industries.
- Supergain tax – any company of which the profit exceeded Rs. 2000 million – tax amount worth 25% off its profit will be charged
- Vehicle assembly plants have neglected their income tax payments during the previous regime. Rs. 12,0000 million revenue expected through prompt payments [is this 120 billion? I feel like the Daily Mirror is messing up some of its numbers]
- Casino business-owners to pay Rs: 1000 million as a tax – first payment to be made before April.
- One time tax of Rs. 250 million to be paid by telecommunication providers
- One time tax of Rs. 250 million to be paid by mobile phone operators
- Rs. 1000 million tax imposed on television stations dedicated to sports [CSN, basically,
but I think MTV Sports would also get hit, I’m told this applies only for channels that haven’t paid tax, so it’s basically just directed at the channel run by Mahinda’s sons]
- Rs. 1.5 million permit fee will be charged from vehicle importers (irrelevant of whether the imported vehicles are brand new/reconditioned).
- Mansion tax – Rs. 1 million per annum will be charged for houses of which the value is estimated at Rs. 100 million or exceeds 5000 sqft
So, to summarize, big business is going to pay. They have, however, excluded people in the construction and consumer goods industries. It seems to be telecom, TV, vehicles and casinos. Telecom and TV are the ones I don’t get. Of course, no one making profits of over 2 billion will get away under the Supergain Tax. Note that this budget taxes businesses and not wealthy individuals (beyond the mansions thing). This is because Sri Lankan income tax collection is really bad.
Giving To The Poor
There are honestly too many give-aways to list. Whereas they’re taking billions at a time from big companies they’re giving it away a few rupees here and there. But they are giving it away to the masses.
- Salaries of state sector servants incresed by Rs. 10,000 – Rs. 5000 will be given in February/ remaining Rs. 5000 in June- Thereby state sector employees’ salaries increased by 47%
- Request made for private sector employers to increase the salaries of private sector employees Rs. 2500
- Reviewing of pensions – Increase of Rs. 1000 with effect from April.
- Senior citizens with Rs. 1 million in their bank accounts to be given 15% interest rate.
- An allowance of Rs. 20,000 to be paid for expectant mothers
- 50% of the loan amounts borrowed by farmers to be waived off.
- Hand tractors will be given away at concessionary rates / fertilizer concession will be continued + the quality will be increased.
- A sum of Rs. 2000 million to be allocated to the fund reserved for kidney patients (called CKDU patients in the budget).
- 13 essential goods price reduction by removal of taxes – with effect from midnight (sugar, milk powder, sustagen, flour, bread, green gram, sprats, canned fish, coriander, Maldive fish, chili powder).
- School van fees reduced by 5%
- Kerosene reduced by another Rs. 6 per liter
- 12.5kg gas cylinder price reduced up to Rs. 1596 (Rs. 300 reduction)
- Gold jewellery pawned to banks – that don’t exceed Rs. 200,000 – interest will be waived off.
- Vehicle taxes reduction 15% for vehicles with engines below 1000 CC.
- Cement prices to be reduced by Rs. 99
- Marriage registration fee to be reduced up to Rs. 1000 from Rs. 5000.
- The government has waived off the 25% tax paid by customers when reloading phones.
- Special facilities for disabled war heroes – special loan scheme named Viru Diriya to be introduced in state banks/ maximum borrowing Rs. 500,000.
- Mahapola scholarship fee to be increased upto Rs. 5000
- Rs. 250 monthly allowance to be paid to pre-school teachers.
- Dahami Diriya for Sunday school teachers – a monthly sum of Rs. 200 to be paid.
- Every citizen to have a bank account – can be opened in commercial banks with an initial deposit of Rs. 250.
- Public transportation costs to reduce by 50% for senior citizens.
For the full list please visit the Daily Mirror. I think you get the jist of it.
I suppose it’s what they’ve campaigned on – these buggers have been getting fat while the cost of living has been increasing on you (being the average voters). So they’re taxing the fat buggers and reducing the cost of living.
That said, I don’t think they’re necessarily taxing the right fat buggers, and ‘one-time taxes’ introduces a huge amount of uncertainty into any business venture.
Generally, however, I don’t think too many people are going to be mad at casinos and huge companies being taxed. This is the most populist budget that I’ve ever seen, but it is at least getting money in rather than just giving it away. Seems like it would be appealing to average voters. Which I think, more than anything, is the point.