Vote On Account Concessions galore as promised: PM

Published : 9:09 am  November 2, 2018 | No comments so far |  | 

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By Chaturanga Samarawickrama   

Tax concessions on several consumer goods had been reduced by Prime Minister and Finance Minister Mahinda Rajapaksa as he promised at a meeting held at the President’s Secretariat yesterday.   

 

 

  • The Finance Ministry had decided to reduced a litre of Petrol by Rs.10 while a litre of Auto Diesel was reduced by Rs.7
  • The fuel prices had been increased drastically during the past three months
  • The commodity prices of Dhal, Chickpeas, Black gram, Wheat grain and Sugar have been reduced

 

 The Government had reduced taxes on consumer goods, the telecommunications levy, the threshold on loan advances, fertilizer prices, income tax on agriculture, Withholding tax etc.   


“The fuel prices had been increased drastically during the past three months after implementing the fuel price formula by the previous government. People were inconvenienced as a result. They should not have to bear heavy taxes the formulation of which should be simplified,” Finance Minister Rajapaksa said.   


The Finance Ministry had decided to reduce a litre of Petrol by Rs.10 while a litre of Auto Diesel was reduced by Rs.7 with effect from last night resulting in a litre of petrol being sold at Rs.145 and a litre of auto diesel at Rs.116. Lubricants, including 2T lubricants used in three-wheelers and small agricultural engines, have been reduced by Rs.10 per litre.   


A cost-based pricing mechanism will be implemented on fuel in place of the monthly fuel price formula, Minister Rajapaksa assured.   


The commodity prices of Dhal, Chickpeas, Black gram, Wheat grain and Sugar have been reduced with immediate effect to reduce the high cost of living and to protect the local farmer as well.   


The Special Commodity Levy will be reduced on Dhal by Rs.5 per kilo, Chickpeas by Rs.5 per kilo and Black gram by Rs. 25 per kilo. Customs Duty on Wheat grain will also be waived to Rs. 9 per kilo from the existing waiver of Rs. 6 per kilo. Sugar will be brought under the Special Commodity Levy whereby the taxes applicable to it will also be reduced by Rs.10 per kilo.   


A guaranteed price would be introduced for Paddy, Onions and Potatoes produced locally by our farmers. The Special Commodity Levy on potatoes and B-Onions would be maintained at Rs.40 per kilo.   


The interest and the penal interest incurred by farmers and small-scale paddy mill owners on loans upto a maximum of Rs.50 million from all commercial banks during the past 3 years will be written off in full and will be borne by the Government. The maximum threshold on loan advances given by Samurdhi banks to Samurdhi beneficiaries to support their livelihoods will be increased by Rs.10, 000.   


Fertilizer prices for paddy will be maintained at Rs.500/50kg bag and fertilizer prices for other crops will be reduced to Rs.1, 000/50kg bag from Rs.1, 500/50kg bag.   


The concessionary income tax rate of 14% on agriculture is presently applied only for the companies engaged in agricultural businesses. The income tax of individuals from Agricultural undertakings will also be reduced from the existing maximum rate of 24% to 14% so that farmers are encouraged.   


Withholding tax will be exempted on interest on any savings and fixed deposits maintained in any financial institution.   


To encourage local entrepreneurs, professionals and migrant workers to remit their earnings in foreign currency on services provided outside Sri Lanka, income tax will be exempted on such remittances.   


The adverse impact created by high indirect taxes will be mitigated by simplification of VAT and NBT. The VAT threshold will be increased from Rs.12 million per annum to Rs.24 million per annum.   


The threshold for the VAT liability of wholesale and retail sector also will be increased from Rs.50 million to Rs.100 million per twelve months providing benefits to small traders and businesses.   


The VAT rate applicable on the import of sawn timber will be reduced to 5% to support the local construction industry.   


VAT on imported fabrics will be done away with providing benefits to small and medium-scale garment manufacturers.  Considering the high tax imposed on telecommunications services, the Telecommunication Levy of 25% will be reduced to 15%.   


The thrust of these initiatives are to encourage production and simplify the tax system. It will certainly help households with additional income in their hands. The proposed changes to the tax system will also encourage inward remittances and savings.   


The President, Prime Minister/ Finance Minister had directed the implementation of the above policy measures. The necessary gazettes for the aforementioned tax related proposals will be issued today (2) and Cabinet approval is sought to amend the necessary tax laws.     

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