Budget 2021 focuses on reviving pandemic-hit economy | Sunday Observer

Budget 2021 focuses on reviving pandemic-hit economy

22 November, 2020

Prime Minister Mahinda Rajapaksa as Minister of Finance, presented the first Budget of the SLLP government in Parliament on Wednesday.

The ‘people-friendly Budget’ included a series of key proposals that focused on reviving the pandemic hit economy through the development of local businesses, industries and foreign investment. He also outlined the measures envisaged for social welfare, education and environmental protection in addition to poverty alleviation as visualised in the “Vistas of Prosperity and Splendour”, the policy framework of the Government of President Gotabaya Rajapaksa

Minimising the disparities in income levels between provinces and the urban rural inequalities are core factors, the Premier underscored saying that, “We are at a time, when many countries have realised the geopolitical significance of our country.”

He said, “We should formulate our national policies with a long term strategic vision, protecting our sovereignty, to exploit the development opportunities that arise as a central hub, in the new economic order of the world, to both the conventional western advanced economies and the powerful emerging eastern economies.”

President Gotabaya Rajapaksa also arrived in Parliament on Thursday to watch the budget debate in progress.

It was the second day of the debate on the second reading of Budget 2021.

The President entered the Chamber with Prime Minister Mahinda Rajapaksa. This was the first time he sat in the House after addressing the inaugural session of the new Parliament.

The following are proposals introduced in Budget 2021:

  • Rs 18,000 million additional provisions to combat Covid-19
  • A Special Goods and Services Tax for telecommunication, alcohol, cigarettes, vehicles and betting
  • Business organisations engaged in agriculture, fisheries, and livestock farming industries will be exempted from taxes during the next five years
  • Establish an uncomplicated online income tax system for all income taxpayers
  • New laws against auditors and companies that prepare false tax records. Also establish a special Court of Appeal to hear public complaints pertaining to tax
  • Exempt tax on dividends of foreign companies for three years if the money is invested in Sri Lankan sovereign bonds or in the stock market
  • Non-residents will be allowed to purchase super-luxury condominiums using foreign currency
  • Value Added Taxes will be kept unchanged at 8 percent for businesses that record a turnover of more than Rs 25 million a month except Banks, Finance and Insurance Companies
  • A 50 percent tax exemption for local companies listed in the Colombo Stock Exchange until December 31, 2021. Also a 50 percent income tax exemption to local companies if they register before December 31, 2021 to be listed in the Stock Market
  • Sri Lankan migrant workers will receive Rs. 2 for every dollar remitted, to increase annual foreign remittances and a contributory pension will be allotted for Sri Lankan migrant workers
  • Foreign loans of 1,400 million USD to be obtained for the next five years from the Japan International Cooperation Agency, World Bank and Asian Development Bank
  • A Samurdhi Savings Account for all Samurdhi beneficiaries through Samurdhi Bank. A new loan scheme is proposed for Samurdhi beneficiaries at 7 perccent interest
  • New laws to be introduced in relation to data security, cyber security and intellectual property.
  • Rs 8 billion to be allocated for the expansion of the technology sector
  • Special program to be conducted to strengthen public security spending Rs 2,500 million
  • Television sets to be provided for rural schools to facilitate students to watch Guru Gedara educational programs. Rs 3,000 million allocated for the project
  • Five technological parks to be established across the country
  • A five year tax relief for private educational institutions
  • Additional fund of Rs. 3,000 million to initiate a scholarship program to provide a Rs. 4,000 monthly allowance to students receiving vocational education based on their active participation
  • A new insurance scheme for workers engaged in services that are vulnerable to the Covid-19 virus
  • Technical colleges of which the annual intake is at present 100,000 to be increased to 200,000 students per year
  • Rs 750 million to be allocated for housing, health, education and entrepreneurship needs of retired, injured or deceased military servants
  • Encourage the manufacture of train compartments as a local industry
  • Railway network including Colombo and Kelani Valley to be expanded with a Rs. 1,300 mn investment
  • Construction of the national expressway to be expedited.
  • Colombo’s Marine Drive to be extended to Moratuwa
  • In addition to the Lakvijaya Power Plant, a 300 MW Coal Power Plant and two 600 MW Natural Gas Power Plant to be constructed promptly
  • Repayment of refinancing loan facilities provided by CBSL to Tourism sector extended till September 30, 2021
  • Daily wage of estate workers to be increased to Rs.1,000 from January 2021
  • Create a sports economy worth USD 1,000 million during the period 2021-2024
  • Rs. 250 million for the development of underprivileged temples
  • Construction of 50,000 houses already initiated under the Urban Development Authority with a 25 year loan at 6.25 percent interest granted to applicants of these state housing projects
  • Bilateral agreements to be reviewed, to ensure national security and Sri Lanka’s non-aligned stance
  • Import duty on vehicle spare parts to be reduced, spare parts imports restrictions to be relaxed
  • Two years leave for state employees who wish to seek overseas employment
  • Rs. 3,000 million allocated to solve human-elephant conflict
  • Permission granted to non-executive government officials to engage in additional occupations after official hours of duty
  • Proposal to amend Employees’ Provident Fund Act to expand the retirement age for both men and women up to 60 years.
  • Production of disposable polythene and plastic will be banned with effect from January 1, 2021
  • Rs 20,000 million to develop infrastructure facilities to expedite the process of resolving pending cases in courts
  • A 10-year tax relief on recycling sites for investors
  • Rs. 3,000 million allocated to local government to prevent waste dumping in forests and protected nature reserves
  • Electricity consumers assured a sustainable and renewable energy supply by 2023 with 70 percent of Sri Lanka’s energy supply being sourced from renewable energy sources
  • Business activity in the Colombo Port City Special Economic Zone to commence in 2021 while a new legal framework to monitor these business activities will be tabled in January 2021
  • Rs. 5,000 million allocated to improve rural hospitals, dispensaries, and maternal clinics. Rs. 3,000 million allocated to provide the required teachers and basic facilities to rural schools, along with the 1,000 National School Development Programs to be implemented at the Divisional Secretariat level.
  • Additional funds of Rs. 5,000 million to develop water resources and reservoirs in line with the program to provide drinking water to 200,000 families during 2021
  • Strengthen surveillance by the Sri Lanka Air Force to prevent illegal deforestation. The identified deforested lands will be reforested with the assistance of the Sri Lanka Air Force. Rs. 3,500 million to be allocated for the accelerated forestation program during 2021-2023
  • The Kerawalapitiya – Mirigama, Kurunegala – Dambulla and Pothuhera – Kandy segments of the Central Expressway to be completed by 2024
  • Ruwanpura Expressway to connect the Southern Expressway by the Ingiriya – Kahathuduwa segment