BUDGET WRAP - Consumer-friendly budget presented, fuel prices down, relief on power, water
2008-11-06 16:41:32

President Mahinda Rajapaksa on Thursday presented a consumer-friendly budget, cutting kerosene, diesel and petrol prices, provided concessions on VAT and also relief on power and water bills.

A reduction on some items under Value Added Tax (VAT) is to come into effect from January 2009 although cess has been increased, in some cases by 50%. The President also announced a Rs.6 billion earmark to restart Mihin Lanka and to open the Weerawila Airport in Hambantota as well as other funds reserved for rural development. The President further announced some increases in the cost of living allowances.

Addressing the conflict at the start of the budget presentation, the President said the army is fighting in conflict areas without disrupting civilian life. He added that terrorist activities are weakening and urged the LTTE to lay down their arms and join the mainstream. The President said more than 6% growth is expected for the coming year, adding that the current growth rate is at 6.5% and inflation is currently at 20%.

Here are highlights of the budget: - Rs 30 reduction in power bill in case of usage of below 90 unts - 20 % cut in water bill in usage of below 15 units - Diesel prices reduced by Rs.30 with immediate effect. - Kerosene prices reduced by Rs.20 with immediate effect. - Petrol prices will be reduced by Rs.15 with immediate effect. - 100% tax increase on all motor vehicles. - 50% cess increase on electrical items (white goods). - VAT reduced to 12% from 15% from January 2009. - Current mobile and wireless phone tax will be extended to fixed lines. - Increase in cost of living allowance to Rs.4500, up by Rs.1000.

*** - Rs.150 million project to clean the sewage systems in Colombo and the suburbs to start next year. - Rs.3 billion cost for oil imports. - 300,000 new jobs have been created so far this year. - Per capita income has doubled to US$2000 from US$1000 in 2008. - Increase of Rs.360 billion on capital expenditure. - Increase of Rs.100 billion for education. - Rs.19 billion projected as state expenditure. - 35% cess increase in animal food products. - Paper mills under State Printing Corporation to be re-opened. - Rs.300 million has been earmarked to open 1000 mini cooperative supermarkets. - Rs.300 million will be spent on rural sports development. - Rs.6 billion to restart Mihin Lanka and the opening of Weerawila Airport in Hambantota. - Rs.350 million to be spent on medical care in certain rural areas. - Rs.100 million for a Galle City Development Project - Soldiers on duty will have their allowance raised to Rs.5000 from Rs.3000. - Port taxes have been increased to 5% from 3%. - Tax on nation building. - The government will consider reduction in local fuel prices if international prices decrease in the future. - Rs.5000 festival allowance. - Rs.560 increase for cost of living allowance for pensioners. - 96% fertilizer subsidy. - Rs.3 billion earmarked for development in the North. - Cess of Rs.4 per kilogram of imported tea. .