By Chandeepa Wettasinghe Many proposals in the revised budget of the new government that was passed in Parliament last Saturday were amended or further revised, following feedback received from the public.
“These few days have allowed us to correct the mansion tax, correct the hybrid tax and a few other areas,” Finance Minister Ravi Karunanayake said, as he was addressing a gathering at the Organisation of Professional Associations (OPA) recently.
The mansion tax has been revised to include houses spanning over 10,000 square feet, or valued at over Rs.150 million sans the land price, built since 1990.
“If you can spend Rs.150 million to build a house, you can surely give Rs.1 million back to the government,” he said.He noted that the hybrid tax has been amended, so that up to 350 retirees, who had opened letters of credit prior to the budget announcement, would not be affected.
Over 1,000 individuals, who had opened such letters of credit prior to January 29, had been lobbying for relief. Taxes on hybrid cars have gone up by over 33 percent.Following discussions with the Vehicle Importers’ Association, Karunanayake said that electric car taxes have been brought down for those with true concerns about the environment.
“That was the only odd one out of the new taxes imposed. For the environmentallyfriendly, we have brought electric cars down to 5 percent... (this) will help you have a much more affordable environmentallyfriendly car than the hybrid, which is just 30 percent environmentally-friendly,” he said.
The tax on electric cars was 38 percent, which was brought down to 23 percent during the November 2014 budget.
Only 112 electric cars, 100 of them being Nissan Leafs, have been imported to the country until December 2014, since importation began in October 2013.
Meanwhile, in a clarification, Karunanayake said that the super gain tax will be implemented on consolidated taxable profits of companies prior to dividends.
While such an interpretation would be welcome by a handful of business groups, which may have more than one entity earning over Rs.2 billion in profits, new business entities may now be caught up in the tax net. He also noted that most of the companies which are obligated to pay the super gain tax are liquid enough and those with liquidity issues would be given extra time.Karunanayake further added t hat no sector-specific negotiations would be entertained, referring to the banking and telecommunication sectors’ intention to engage with the minister.
“At the end of the day, each of them (banks) has made Rs.6-7 billion, without any fear of any risk that they have taken. So, what we did was go to certain unconscionable profits they have made and take 25 percent of that profit to put back into society. Because, if there’s no sound economy, there’s no point having banks,” he said.
By Chandeepa Wettasinghe
