Reasonable budget in present scenario, say Chamber heads

by Surekha Galagoda

The third budget of the Mahinda Rajapakasa government was presented in Parliament on Wednesday focussing on four priorities - infrastructure development, relief to low income groups, reawakening of local enterprises and the improvement of local products.

The chamber heads said that it was a reasonable budget in the present scenario with emphasis on regional development, infrastructure development and relief for low-income groups.

Mahen Dayananda

President Ceylon Chamber of Commerce (CCC) Mahen Dayananda said that it was a reasonable budget with hardly anything negative for the private sector. This budget is more development-oriented while heavy emphasis has been laid on development of infrastructure and the low-income group.

He said that focus has been laid to develop the regions particularly the Eastern province and this is a very positive feature in the present context. "The budget deficit is expected to be contained at 7.4% and this I think is very encouraging.

The revenue is said to exceed recurrent expenditure by Rs. 38 bln. The set of incentives given to the Sri Lankan owned shipping lines is also most welcome while the fair emphasis given to increase local milk production is also encouraging."

But however a lot depends on containing inflation, which would arise from the budget deficit, said Dayananda.

A. K. Ratnarajah

President, Ceylon National Chamber of Industries A. K. Ratnarajah said that looking at the budget from an industrial perspective, the large allocation made for infrastructure development is most welcome and we hope that it won't be reduced for current expenditure.

The proposal to create a carbon fund is very welcome and we see it as a glorious opportunity for the country.

The incentives given for the gems, textiles, leather and SME sector are most welcome as these will help improve the economy. There was some relief given to the withholding tax problem and stamp duty problem and we welcome those. The introduction of the cess to protect locally produced goods is also most welcome.

Ratnarajah said that though the surcharge on duties were enhanced it is not specific. Most importantly the large number of taxes which the industries are unable to bear affects productivity and as a result competitiveness drops.

D. Eassuwaran

President, National Chamber of Commerce of Sri Lanka (NCCSL) D. Eassuwaran said they welcome the budget proposals as positive but it is a challenging target as it aims to reduce the fiscal deficit to 7 percent of GDP. Therefore the government will need to have a very strong fiscal discipline. There is policy consistency in presenting this budget.

He appreciated that the budget has not placed additional burdens on the public despite the increased expenditure on national security and accepted that it was not possible to extend significant additional concessions by way of reduced tax in the current scenario including the prevailing political realities.

The proposed move to control tax holidays and in the medium term to reduce the tax rate is a progressive development at macro level and the recommendations of the Chamber to simplify tax administration have been accepted and appreciated, he said.

However, the Chamber was disappointed that the tax thresholds for private sector employees have remained static and has not been enhanced to compensate for inflation while the Government has not thought it fit to include the public service in the tax net despite the fact that over the last few years they have been the beneficiaries of significant salary increases and other benefits.

Eassuwaran said that the proposal to improve a ceiling on taxes in arrears is fundamentally good provided it is implemented in a manner that would impose a requirement for the revenue authorities to be realistic and fair by aggrieved taxpayers when issuing assessments.

The incentives provided to key sectors, rural development and high technology machinery and continued commitment of the government to upgrade the infrastructure of the country was appreciated. The Chamber is pleased about President Mahinda Rajapaksa's assurance given not to increase fuel prices and the subsidised loan scheme to the SME and agriculture sector.

Vice President NCCSL Asoka Hettigoda appreciated the opportunity given to Sri Lankan companies to borrow funds from the international market and exemptions given to local industries.

Exemption of tax to import high tech machinery will help Sri Lankan companies to compete in the international market, he said.

Council Member NCCSL S. R. Balachandran said that no government can prepare a budget that could satisfy everybody and this time people expected an increase in prices on essential goods and VAT but there was nothing like that.

But it is not possible to give too many concessions on imported food items because the local food producers must be protected and people can consume local food or pay a little more and consume imported food items, he said. Balachandran said that people can be happy that the tax structure has not been adjusted and that the duty structure is properly looked after.

Also the Government is planning to import essential food items and distribute through 200 Lak Sathosa outlets at reduced prices to protect the consumer.

President, Federation of Chambers of Commerce and Industry Sri Lanka (FCCISL), Nawaz Rajabdeen said the 2008 Budget is development oriented with emphasis on infrastructure development and acceleration of the 10-year development plan.

He said every successive government that took office spoke only of peace undermining development. If there was no development program for the country, then there is no peace.

"The Chamber welcomes the move of President Mahinda Rajapaksa to develop the Eastern Province despite the ongoing conflict. The Eastern Province development program will facilitate our Chambers in Ampara, Batticaloa and Trincomalee", Rajabdeen said. The FCCISL wants a healthy private-public partnership in development activities with stakeholders in the regions as members of the Chamber.

Rajabdeen said the chamber is disappointed that though there are eight Ministers from the Eastern Province they cannot put forward a development program for the region. The FCCISL welcomes the move to develop the agro industry and promote local manufacture of sugar and rice based products which will encourage other industries.

The Chamber chief said that they welcome the exemption of VAT and other duties for people who want to import ships for transportation. If productivity and development go hand in hand the people will be bailed out of inflation, unemployment and other burning issues", he said.

President, Sri Lanka Chamber of Small Industry Aloy Jayawardene said that though they submitted several proposals to develop the SME sector exports none of the proposals had been accommodated.

He said the SME sector should be given facilities to export their products to bridge the trade gap as this is the only way forward.

Jayawardene said that they called upon the government to set up incubators in Chennai and Karachchi so that the SME sector can establish themselves.

surekha@sundayobserver.lk