Ameresekere and Ifham Nizam
"It lays the ground work for future development," he added. Cooney also said that the reduction of the fiscal deficit from 11% last year to a projected 8.5% this year, with proceeds from privatisation and foreign loans expected to help bridge the deficit, were positive factors.
He also said that a projected growth of 4% this year as against a negative 1.6% against last year also sounded positive, when considering the hostile external environment. The breaking of Ceylon Petroleum Corpor-ations (CPCs) monopoly status in the import and distribution of petroleum fuels as announced in the budget and the restructuring of the Ceylon Electricity Board (CEB), were all good for the economy.
He further said that Budget 2002 has introduced a simplified tax structure with the introduction of the value added tax (VAT) comprising of two slabs, one of 20% for luxury items and the other of 10% on essential items, as a replacement to both the national security levy (NSL) which was 6.5% and the goods and services tax (GST) which was 12.5%.
Exempting capital gains from tax and the removal of the 20% surcharge on corporate tax may act as a spur to investment, he said. The gradual reduction on corporate tax beginning from next year may also give a boost to investment, he said.
Cooney also said that it was good that the PAYE tax limit has been increased from Rs 144,000 to Rs 240,000 as announced in the budget. "It saves the tax man, his time, energy and money which is otherwise expended by trying to make collections from small timers," he said. Such an exercise, at the end of the day, virtually yields nothing to government coffers, afer taking into consideration the costs involved in going after such collections, Cooney said.Therefore, it is better for the taxman to concentrate his energies going after big time players, he added.
National Chamber of Commerce (NCC) president Chandra Embuldeniya said that it was a development oriented budget, while not imposing any burdens on the public. It was also a budget that did not spell out any cuts in welfarism.
He said this budget has introduced a 10% VAT on essential items such as electricity, fertiliser, pharmaceutical items and agriculture and fishery equipment, whereas, earlier, most of these items were subject to both a 12.5% GST and a 6.5% NSL levy, while luxury items were subject to a 20% VAT levy.
"Cutting down on red tape when it came to the utilisation of state land for development purposes was another positive feature in the budget," said Embuldeniya. Previously, though, the land was in theory available for investment, a prospective investor had to go through a maze of procedures to have this land released. There are hundreds of acres of unutilised state land in and around Nuwara-Eliya lake, which may now be opened up for development for the building of tourist resorts due to this simplification of procedures, said Embuldeniya.
He also said that announcement of the complete removal of the 100% transfer tax on immovable property previously levied on non-citizens would also give an impetus to investment.
Other positive features in the budget which would give a thrust to investment according to Embuldeniya were the removal of the advanced company tax (ACT), the 20% surcharge on corporate tax and stamp duty on the purchase of land.
He further said that it was a budget that has not imposed any additional burdens on the public. Embuldeniya further said that the VAT that has replaced both the GST and the NSL, by and large gave relief to the consumer.
Embuldeniya also said that the budget targted to bring down inflation to single digit levels, whereas, last year, inflation was recorded at 14.%. He said that a single digit inflation figure was possible by cutting down on the cost of production and by the reduction in prices.
Ceylon Chamber of Commerce (CCC) chairman Chandra Jayaratne when contacted said that the CCC would release an official statement concerning their views on the budget today.
Industrial Associ-ation of Sri Lanka, Chairman Cubby Wijetunge said that the budget would assist in giving a kick-start to the economy.
He also praised the structural changes in policy, which he believes would give a new lease of life to the corporate sector and encourage foreign direct investment (FDI).
He added: "It is now up to the corporate sector to make use of this opportunity. Overall it can be called a well-balanced budget which if implemented would spell success.
Former Education Minister Dr. Sarath Amunugama blasted the first budget of the new UNP regime.
Amunugama said that it is a budget for the super rich non national investor. He added that all the restrictions on foreign investment have been removed.
"It follows the JR policy of letting the robber barons come. But there is hardly anything to the poor man who voted for the UNP."
He added that the consolidated VAT will increase the cost of all things that are important to the poor man.
"The PA government exempted about 40 items from GST. Now they will be caught in the VAT trap.
Crucial items like energy, land and basic food imports will be handed over to the private sector while the government will be a junior partner in development.
In this budget there is hardly any public financing. What they propose to do is to sell our main assets to the governments capitalist cronies."
He concluded: "Finally, there is nothing for the poor man but there is "VAT 69" to the capitalist cronies of the UNP.
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