Annual Report 2008 - Ministry of Finance and Planning

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2. Fiscal Developments - 2008 60 • Environment Conservation Levy was imposed on selected items from August 2008, but it could not be implemented due to the stay order granted by the Supreme Court. The stay order was relaxed on charging this levy on the mobile phones and this came to effect from December 2008. • Cess rates were increased or imposed on certain imports to discourage non essential imports to strengthen the local industries. • The import duty on wheat grain was increased from 6 to 10 percent with effect from 06th November 2008 to discourage the consumption of wheat flour and to promote the production of paddy and other grains. Other Development Measures • The Special Commodity Levy on imported milk powder was increased from Rs. 5 to Rs. 15 per Kg in November 2008 to encourage dairy farmers and the funds collected from this has been earmarked to import milking cows, promote breeding centres and set up small and medium scale milk farms on a scientific basis and to broaden the veterinary services. of fruits and vegetables the existing cesses on similar imported items were scaled up by 25-50 percent. • With a view to protect the local handicraft industry cess imposed on all related substitute imports were increased by 100 percent while import duty & VAT on raw materials such as copper, silver were exempted in order to minimize the production cost of local entrepreneurs. • A cess of 15 percent was imposed on all imported furniture to further incentivize related local manufactures. • To incentivize the local footwear, hand bags and belts manufacturing industries the applicable cess rates were scaled up on related imports of such products while all the raw material required for such manufacturing were exempted from import duty and VAT. • As an incentive to local maize farmers a cess of 25 percent was imposed on imported maize and this has been further increased to 35 percent from beginning of 2009. Sogam which is a close substitute of maize came under a cess levy of 35 percent as a further incentive to local maize farmers. • The Special Commodity Levy on sugar was increased from Rs. 14 to Rs. 16 per kg in order to encourage local sugar industry. • In order to preserve the environment and to discourage the usage of polythene and plastic the cess applicable on such imports were increased from 1 to 5 percent. • To promote local agricultural produce such as Black Grain, Kurakkan, Cowpea and Sesame seed, a cess of 15 percent was imposed on similar imports. • To promote locally made flour such as rice and Kurakkan flour, a cess of 5 percent was imposed on imported wheat flour. • The cess levied on imported chocolates, biscuits and sweets was further increased to promote local production of such items. • To encourage the local production of sarees, sarongs and ready made garments and domestic production • Stamp duty on any deed of mortgage of aircrafts and ships has been exempted while registration of a ship under the Sri Lankan flag has been exempted from the PAL. • Accounts maintained by the Co-operative societies, School Development Societies and “Api Wenuwen Api” fund have been exempted from debit tax for a period of 5 years. • Land transfer tax was exempted for foreigners who invest on IT related training institutions, educational institutions and the BPO industry with an investment not less than US $ 2 million. Ministry of Finance and Planning Sri Lanka Annual Report 2008
2. Fiscal Developments - 2008 61 Non Tax Revenue Performance Non tax revenue generated Rs. 69,639 million a growth of 24 percent over 2007. Increase in social security contribution arising from higher salaries, sales and charges mainly from Telecommunication Regulatory Commission and higher interest income received contributed for the enhanced nontax revenue. Further, the non tax revenue was boosted by the Central Bank profit transfers amounting to Rs. 8,000 million compared to Rs. 4,000 million in 2007. Table 2.13 Finance & Revenue Related Legislations (2007 November - 2008 December) Statute Objective Value Added Tax (Amendment) Act No. 15 of 2008 To grant the exemptions and rate reductions as mentioned in budget 2008 Finance (Amendment) Act No. 7 of 2008 To extend the 10 percent mobile telephone levy presently imposed on mobile phones to cover the cordless telephones Finance (Amendment) Act No. 8 of 2008 To revise the Social Responsibility Levy (SRL) rate from 1 percent to 1.5 percent and remove SRL charged on personal income tax. Inland Revenue (Amendment) Act No. 9 of 2008 To implement proposals in budget 2008 Stamp Duty (Special Provision) (Amendment) Act No. 10 of To simplify the tax system and fall in line with the existing 2008 mechanism adopted by Provincial Councils, stamp duty payable on leases and mortgages to be made either by affixing the receipt of proving such payment to a bank or by affixing the stamp. Economic Service Charge (Amendment) Act No. 11 of 2008 To enable the ESC rate not to exceed 0.25 percent if the turnover of any business comprises of export earnings in foreign exchange and to increase the rate with respect to the turnover of liquor and motor vehicle sales from 0.5 percent to 1 percent. Amendments have also been made to rectify the existing anomalies. Regional Infrastructure Development Levy (Amendment) Act To increase the Regional Infrastructure Development Levy by No. 12 of 2008 2.5 percent. Butchers Ordinance (Amendment) Act No. 13 of 2008 To prohibit slaughtering of lactating cows imposing a fine of Rs. 50,000 or an imprisonment for a period not exceeding three years, for not adhering to the prohibition. Strategic Development Project Act No. 14 of 2008 To enable granting tax free period/concessions for identified Strategic Development Projects. Environment Conservation Levy Act No. 26 of 2008 To enable imposing a levy on items imported, domestically manufactured and on a service provided within Sri Lanka which is likely to have a harmful impact on the environment. Compiled by Department of fiscal Policy Ministry of Finance and Planning Sri Lanka Annual Report 2008
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2008 Annual Report Ministry of Fina
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2 This Report is Published in terms
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4 Heads of Treasury Departments (as
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6 Heads of Statutory Boards / State
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8 Contents Chapter 1 - Macro Econom
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Page 18 and 19: 16 Sri Lanka at a Glance - 2008 KEY
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2. Fiscal Developments - 2008 110 B
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2. Fiscal Developments - 2008 114 P
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2. Fiscal Developments - 2008 124 T
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2. Fiscal Developments - 2008 134 D
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138 Ministry of Finance and Plannin
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3. Performance of Public Enterprise
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4. Reform Initiatives 174 An Overvi
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4. Reform Initiatives 176 also prov
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4. Reform Initiatives 178 Finance/R
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4. Reform Initiatives 180 Environme
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4. Reform Initiatives 182 Pradeshiy
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4. Reform Initiatives 184 SALIENT F
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4. Reform Initiatives 186 The Credi
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4. Reform Initiatives 188 Name of t
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4. Reform Initiatives 190 Project P
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4. Reform Initiatives 192 TERMS OF
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4. Reform Initiatives 194 Table 4.8
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4. Reform Initiatives 196 grounds,
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5. Foreign Financing of the Budget
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6. A Sectoral Perspective 236 An Ov
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6. A Sectoral Perspective 238 Table
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6. A Sectoral Perspective 240 Agric
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6. A Sectoral Perspective 242 Shift
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6. A Sectoral Perspective 250 Lives
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6. A Sectoral Perspective 252 In te
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6. A Sectoral Perspective 254 Box 6
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6. A Sectoral Perspective 256 Distr
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6. A Sectoral Perspective 258 the P
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7. Development Finance 260 An Overv
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7. Development Finance 262 Table 7.
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7. Development Finance 264 Krushi N
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7. Development Finance 268 Agro Liv
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7. Development Finance 270 Chart 7.
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7. Development Finance 272 The tota
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7. Development Finance 274 Small an
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7. Development Finance 278 SMERDP N
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7. Development Finance 280 (RFSDP)
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7. Development Finance 282 • Pape
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8. Financial Statements - 2008 286
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328 8. Financial Statements - 2008
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