Archives

Development oriented budget today

by Ravi Ladduwahetty

The theme of the Government's economic agenda for 2002 will be based on accelerated economic development through Foreign Direct Investment (FDI) when Finance Minister K. N. Choksy presents the United National Front's (UNF) Government's maiden budget in Parliament today.

The 2002 budget will have a deficit of around Rs. 154 billion and it will be maintained at around 8 percent of the Domestic Gross Product (GDP). Adjustments were being made to bring down the deficit to around Rs. 150 billion as this edition went to press, authoritative Government sources told the Daily News yesterday.

Among the highlights of the 2002 budget will be sweeping reforms in the taxation system coupled with a series of structural reforms that will be a catalyst for private sector led growth, according to these sources.

The structural reforms will also aim to simplify the existing procedures at the key Government institutions which the private sector has to deal with such as the Port, Customs Department etc.

There will be unprecedented incentives in the spheres of agricultural and industrial development and also in the trade and service sectors, with a special emphasis for port related activities which will revolve round shipping and cargo handling, they said.

The tax system will be simplified and broadbased and adjustments will be made to the Corporate Tax and Income Tax. The idea behind this proposal is to make the taxation regime, a more homogenous one, they said.

The tax reforms will be made in a manner where there will be an adjustment of the slabs aimed at netting in more defaulters and in the light of the Department of Inland Revenue having only 350,000 tax files. The Department will also set up regional offices to nab those evaders who draw lucrative incomes through self employment. Responding to a question amidst rife speculation as to whether the National Security Levy (NSL) will be done away with totally

and whether the prevailing Goods and Services Tax (GST) will be replaced with the value Added Tax (VAT) with, these sources were extremely tightlipped. These sources also said that the elimination of the NSL was being negotiated as this edition went to press while other sources said that the GST, currently at 12.5 percent, was unlikely to be removed.

A further salient feature of the 2002 economy is that domestic borrowings will be curtailed to the maximum to prevent the rising tide of inflation.

This policy decision will also come in the wake of the Brettonwoods institutions - the World Bank and the International Monetary Fund along with the Asian Development Bank pledging additional aid and grant funding due to confidence building measures following the Government's positive measures in respect of the peace process.

Of the development projects, the Hambantota Port Development Project and the Colombo-Matara expressway will take top billing and both will get off the ground this year, according to these sources.

News | Business | Features | Editorial | Security
Politics | World | Letters | Sports | Obituaries |

Produced by Lake House
Copyright 2001 The Associated Newspapers of Ceylon Ltd.
Comments and suggestions to :Web Manager