2016 Budget Highlights

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The new government’s first full-year budget, for the fiscal year of 2016, was presented to the Parliament of Sri Lanka by Finance Minister Ravi Karunanayake. It is the first Budget of the unity government formed by the UNP and SLFP under President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe and the 69th Budget overall. Here are listed highlights taken from budget speech.

·         Prices of essential items reduced: Sprats - Rs 410, Dhal - Rs 169

·         Price of infant milk to be reduced by Rs 100.

·         Special trade tax on potatoes and big onions to be reduced by Rs 25. Maximum price for canned fish (Rs 125).

·         Domestic cylinder of LP gas (12.5kg) to be reduced by Rs 150 and kerosene to be reduced by Rs 10 per litre. 

·         Rs 3,000 million to be allocated to build three new Cancer Hospitals in Nallur, Kandy and Matara.

·         New pension scheme for the enter public sector from 2016 including Members of Parliament. 

·         Number of police stations to be increased from 428 to 600. Rs 1,000 million to be allocated for this.

·         New domestic airports to be built in Digana, Badulla and Puttalam. Mattala Airport to be converted into a transfer terminal for air cargo.

·         Rs 90,000 million has been allocated for education (5.41 % of GDP).

·         A Rs 250 savings account to be introduced to all Grade 1 students while all teachers to get 2 years training. 

·         Import tax on printed book, journals and magazines to be complexly removed.  

·         Rs 2000 to supply electricity for all schools without electricity and Rs 10,000 million to develop 3,577 primary schools. 

·         Rs 4,000 million to be allocated for the improving of sanitation facilities and water supplies for all schools in the island by end of 2016.

·         Finance Minister proposes 5 working days a week for the private sector.  

·         Minister appeals for a minimum Rs 2,500 salary hike for private sector employees. 

·         Free WiFi Zones for every university.  

·         New university named “Mahapola University” to be established in Malabe with an investment of Rs 3,000 million. 

·         Minister proposes all employees to instruct their employers to open a bank account for the purpose of remitting their salaries. “It will be knows as a salaries account.” Every employee will have a bank account opened by the employer for and on his behalf. 

·         Finance Minister proposes to merge HTFC Bank and State Mortgage and Investment Bank (SMIB) to create a much stronger and large National Housing Bank. 

·         Lankaputhra Bank to be merged with Regional Development Bank to create Lanka Enterprise Development Bank and also Sri Lanka Saving Bank to be merged with National Savings Bank. 

·         The Divineguma Bank to be merged with the National Savings Bank.

·         Special emphasis will be placed on developing Bentota, Deduwa, Mirissa, Colombo Fort locality as tourist zones with participation of private sector. Galle to be developed as Heritage City.  

·         Import duties on carriages, yachts, mini boats, serfing equipment etc; to be removed in order to promote tourism. 

·         Special zone to be reserved in D.R. Wijewardena Mawatha for the establishing of the Colombo International Financial Center. 

·         Plans to convert Sri Lanka into a shopping paradise. Duties on electronic items, shoes, garments and other accessories to be reduced to make the country a shopping hub like Singapore.

·         50% tax holiday for 5 years to those in MICE tourism 

·         3,000 to be trained in hospitality industry

·         100,000 housing units to be constructed for low income families within 5 yeas. Import taxes imposed on construction materials to be reduced.

·         A new state-of-the-art convention hall to be built at a cost of Rs 3,000 million in the New Town Hall area in Colombo.

·         Finance Minister proposes to abolish Securities Investment Account (SIA) trough which the foreign investors have been requested to channel their investments to the country. “Investors should be allowed to bring in their money to Sri Lanka through any bank account.” 

·         Super gain tax to be removed. “NO such Super Gain Tax in the future,” says minister. 

·         An Export Import Bank to be set up from April 01, 2016 and to be listed as the Colombo Stock Exchange.

·         Rs 50 million seed capital to be allocated.  

·         Finance Minister proposes to remove the tax imposed on leasing of land to foreigners also to remove all restrictions on ownership of identified investments imposed through the land restriction on alienation act.  

·         Investment Promotion: Sri Lanka to be made one of the quickest places to get investments in the world (within 50 days).

·         National Digital Identification system will be introduced from January 01, 2016. Rs 10 billion to be allocated for this project. All government buildings to be digitized by 2018.

·         Auction of the gem and Jewellery institution will be held. “A gem auction will be held in Sri Lanka every April and in October and our intention is to get a better rate for the crude gems that are there.” April 2016 will be the first auction in this country.  

·         Two year tax relief for rubber industry.

·         Guaranteed price for paddy (Kiri Samba - Rs 50, Samba - Rs 41, Nadu - Rs 38)

·         Government to allocate Rs 4 billion for wildlife conservation and to solve the human-elephant conflict over a period of 3 years. 

·         Rs 1.5 billion to be allocated for each Grama Niladhari Division for rural economy development. New economic zone to be created in Vavuniya.  

·         Government to promote export of chicken: “In order to assist to get into the international market the government will make anything and everything possible to make it competitive so that we’ll be able to go into a new market,”

·         Rs 750 million to be allocated for the development of the fisheries harbours in Chilaw, Mirissa, Kalmunai, Valvettithurai   

·         Life insurance scheme for Rs 1 million for fishermen will be introduced.

·         The maximum retail price of a 400g packet of locally manufactured milk powder will be reduced from Rs 325 to Rs 295.

·         The government will establish a regulatory authority to streamline micro, small and medium scale enterprises.

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2016 Budget was passed in parliament with a majority of 108 vote

The Second Reading of the 2016 Budget was passed in parliament with a majority of 108 votes.

One hundred and fifty nine (159) votes were cast for, and 52 votes were cast against the budget. Thirteen (13) MPs were absent during the voting.

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