True to expectations, Finance Minister Mangala Samaraweera yesterday presented a people-friendly Budget for 2019, balanced with maintaining policy consistency and reforms for the private sector, though the Opposition and some analysts were wary.
A segment of Samaraweera’s proposals were targeted at increasing economic competitiveness, while others were focused on providing voter incentives for an election year, and revenue-generating measures. The Budget for 2019 was titled “Enterprise Sri Lanka -Empowering the People and Nurturing the Poor.”
Predictably, the Government increased the salaries of public sector workers, by giving an interim allowance of Rs. 2,500 per month from 1 July. Payments to a range of social segments, including the elderly, armed forces, differently-abled, and Samurdi beneficiaries, were also listed out. A significant segment of the Budget was also dedicated to policies aimed at increasing women’s participation in the formal workforce, and encouraging entrepreneurship.
Budget 2019 also raised production tax on cigarettes by Rs.5 per stick, production tax on hard liquor 750 ml by Rs.63, and a beer can by Rs.9. Given the high debt repayments in 2019, and moderate reserve levels, the Government opted on the side of caution and increased costs on small vehicles, deviating from the usual practice of reducing prices during election years. Accordingly, production tax on vehicles less than 1000cc has been increased by Rs.175,000, and for less than 1300cc by Rs.500,000.
Production taxes on electric vehicles less than 70KW will be reduced by Rs.175,000. Three-wheelers of 200cc will see their production tax increased by Rs.60,000.
The core of the Budget was focused on measures to increase exports, attract investment, promote key industries such as tourism, and improve skill levels of the workforce. However, Samaraweera had tough words for the private sector at the start of his speech, insisting that the Government was on the side of companies that were willing to be competitive.
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