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Tax concessions for small businesses, subsidies for select groups
Tax concessions for small and medium scale businesses, and targeted subsidies to selected groups are among highlights of next month’s budget proposals.
The Government is also set to scale down obtaining of foreign loans for mega projects, instead it will focus on Public Private Partnerships (PPP) and Build Operate and Transfer (BOT) projects in view of the foreign debt repayment dues.
State Minister of Finance Eran Wickremaratne told the Sunday Times that a mechanism to offer targeted subsidies to selected groups, tax concessions for small and medium scale businesses and scaling down on loans for mega projects would be among highlights of the budget proposals to be submitted on November 9.
The budget proposals, now being finalised, would include subsidies for low-income groups, farmers and consumers instead of reducing prices of selected food items. The objective would be to prevent the middleman from making extra profits where there were blanket reduction of prices, Mr. Wickremaratne said.
Small- and medium-scale industrialists with an annual turnover of less than Rs 500 million would be offered income tax concessions in an attempt to protect and encourage them to enter the export market, he said. In a bid to encourage direct foreign investments concessions would be given in accordance with the investment brought into the country in contrast to previous systems where concessions were offered according to the investors’ terms. Accordingly, he said, an investor who would bring in an investment of US$100 million would be given a concessionary period up to 10 years to recover the investment while an investment above US$100 million would be given a tax free period until the investment and 50 percent more were recovered.
The Sunday Times learns the budget will focus on direct taxes aimed at raising revenue from the Customs, Excise duties and the Inland Revenue Department. Liquor prices are expected to be increased further. Under proposal to promote renewable energy and create an eco-friendly economy, the Government is also set to offer tax concessions for hybrid and electric vehicles while further promoting solar power generation.
The Sunday Times also learns that concessions for below 1000 CC vehicles are also under consideration. The Budget speech to be presented by Finance Minister Mangala Samaraweera is expected to last around 90 minutes. The 2018 Budget’s second reading is scheduled to be held in Parliament From November 10 to 15.The committee stage debate will begin on November 16 and will continue until the vote is taken on December 9. For 2018, the total state expenditure is estimated to be Rs. 3,982 billion and revenue Rs. 2,175 billion.