Local News Update: Sri Lanka will maintain Pay-As-You-Earn (PAYE), a wage tax of more than 250,000 rupees per month, but all personal income will be subject to income tax at a uniform rate of 3,000,000 rupees per year from January 01, a notice from tax authorities said.
The government’s immediate priority is to capitalize on the opportunity created for the 2019/2020 Maha season by favorable weather to get the agriculture sector to a full capacity to improve the livelihood of the farming community and ensure food security.
Incentives provided for tourism, IT and enabling services, construction and property market, exports and rural agriculture and overseas employment earning for professionals are expected to drive the economy with price stability.
Government’s commitment towards a prudent fiscal management regime is reflected at the outset itself, in its decision to rationalize the Cabinet of Ministers and its restrictions on non-priority public spending.
As approved by the Cabinet of Ministers, instructions have already been issued to all Ministries, Departments, state enterprises and other institutions, that action must be taken to control their expenditures, including managing the staff, establishment costs, restricting vehicle purchases, building and office spaces and undue year end purchases thus adhering to strict budgetary discipline complemented by a strong monitoring framework.
The reduction in indirect taxes will generate substantial savings in the Ministries, Departments, and other institutions as well.
On the same lines, arrangements are in place to make appointments to key positions in State Owned Enterprises (SOEs) through a selection process, led by a special committee, with the aim of finding qualified and talented personnel to turn around the loss making SOEs to profitable entities.
The expected fiscal deficit for 2019 will be more than the estimated and could settle around 7 percent of GDP, due to both a significant dip in revenue than expected mainly due to slow growth and increase in election-related spending.