Budget geared for growth

The Island

* Rs. 1,500 for public workers

* Rs. 5,000 for July strikers over 65 yrs

* Rs. 1 bn for drought relief

* Free education to be protected

* Expected growth rate 7.5 %

* Projected budget deficit 5.8 %

* Expenditure on education up by 15%

* Rs. 500 for senior citizens

*  Rs. 750 and Rs. 500 for pensioners

* Tax exemptions for racing cars

* Allowances for judges, dons, docs et al revised

November 8, 2012, 12:00 pm

By Saman Indrajith

President Mahinda Rajapaksa, presenting his government’s eighth consecutive budget in Parliament yesterday, offered a 1,500-rupee monthly allowance for each state sector employee, Rs. 1,000 million to ease the burden of drought battered farmers, a 5,000-rupee monthly allowance for the July strikers over 65 years of age and an import tax exemption for racing cars.

He invited Opposition parties to cooperate with the government to solve problems confronted by the people.

Summarising the macro-economic vision of his government for the next two years, the President said that budget 2013 had been framed to ensure that the economy would bounce back at an average growth rate of 7.5 percent next year and eight percent thereafter.

"The underlying fiscal strategy will contribute to a budget deficit of 5.8 percent in 2013 and move towards a deficit of 4.5 percent by 2015, with public debt below 75 per cent of the GDP," President Rajapaksa said.

"I assure children and parents of this nation, through this August assembly, that this government under no circumstance will compromise its commitment to deepen the scope of free education."

Against this backdrop, the President said that the expenditure on education would be increased by 15 percent in 2013.

He proposed to exempt businesses having an annual turnover less than Rs. 12 million from the Nation Building Tax and Value Added Tax with effect from January 2013.

"I propose to raise the Airport Tax by US$ 10 and the Online Visa Fee by US $ 5 from January 2013. I also propose to update several administrative fees and charges which have not been updated for several years. I also propose to introduce amendments to the Finance Act requiring all regulatory agencies and government departments to transfer revenue in excess of the required establishment expenditure and a three month working capital requirement, to the Consolidated Fund, once in three months. "I propose to increase duties by 10-20 percent on all vehicles imported under concessional schemes," he said.

"I propose to allocate Rs. 300 million annually to grant a monthly living allowance of Rs 5,000 to July strikers who complete 65 years of age on January 1, 2013.

"I propose to increase the allowances given to public sector servants by a minimum of Rs 1,500 per month from next year. A Cost of Living allowance of Rs. 750 per month will be paid from January to all public servants. The balance will be provided by granting a further five percent of the basic salary subject to minimum of Rs 750 and a maximum of Rs 2,500 as an additional allowance, to all public servants. I propose to grant 50 percent of the proposed 5 percent increase from May 2013 and the balance from September. All those in staff categories will be given 50 percent from July and the balance from October 2013. I also propose to revise the service related allowances formulated for judges, university academic staff, medical practitioners, and specialised categories, recognising their special role within the affordable limits in the budget and capacity to sustain them over the medium term and grant 50 percent of the increase from January 2013 and the balance from July."

It is also proposed to increase the registration fees on betting businesses to Rs. 2 million and on gaming activities to Rs 100 million. "I also propose to impose a 5 percent tax on the turnover of a gaming business," he said.

In order to provide some relief to retired public servants, the President said it was proposed to grant a special allowance of Rs 750 per month to those who retired before 2004, and Rs 500 per month to those who retired from 2005 to 2006. "I propose to grant 50 percent of this increase from January 2013 and the balance from July 2013. I also propose to increase the cost of living allowance to all pensioners by Rs 500 per month from January 2013."

He proposed an allocation of Rs 200 million to finance the continuance of the interest free loan scheme for media personnel and artistes.

The second reading on the Appropriation Bill will commence today (9) and will continue until November 17 (seven allotted days). The second reading vote will be taken at 6.00 p.m. on November 17. The committee stage debate will begin on November 19 and continue until December 8 (16 allotted days). The third reading vote will be taken on December 8.