Sri Lanka News

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Budget 2007 aimed at development Public sector told to control finances

by Wijitha Nakkawita, Lakshmi de Silva and Ifham Nizam

(President Mahinda Rajapakse enters Parliament Thursday afternoon to present his government’s second Budget. The President carried a file containing Budget proposals instead the customary ‘Budget Box’ pic by Kamal Wanniarachchi)

President Mahinda Rajapakse, presenting his second Budget for 2007, called for stringent financial controls in the public sector, especially for those institutions showing losses. He also emphasized the need to focus on the Government’s development strategies to develop the most under developed areas while giving the private sector entrepreneurs more incentives.

The main thrust of Budget in government expenditure was on infrastructure development, as a strategy to provide a basis for the development of agriculture, industry, construction, tourism, trade, financial and transport services. He gave the private bus operators the incentive of importing buses exempted from VAT.

"We have to look at the hard economic, political and social realities, most of our provinces remain poor, agriculture remains at subsistence level and needs diversification and modernization."

Among the revenue proposals, he increased the Port and Airport Development levy from 2.5 to 3 percent with a concessionary rate of 2.0 percent given for importing selected plant and machinery in high value addition industries.

The VAT and Excise Special Provision Taxes are expected to generate 306 billion rupees in 2007 limiting the credit for Input Tax to 85 percent. VAT paid on motor vehicles will not be allowed input credit and all government institutions will withhold 1/3 of the VAT payable to contractors and service providers. Small contractors, below the VAT threshold will not be liable for this withholding tax.

Revenue from taxation in the current year rose to 2.7 percent of the GDP and this is to be increase to 4 percent in 2007.

-The Island

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November 17, 2006 - Posted by | Media Journalism, News and politics, South Asia

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