Govt. plans to increase cigarette tax to 90%

Health Minister Dr. Rajitha Senaratne yesterday outlined plans to bring in a new proposal to increase taxes of cigarettes to 90% of their purchase price, in what he described as an attempt to reduce smoking in the country. 

Dr. Senaratne in his capacity as the Cabinet Spokesman told reporters that he would draft a Cabinet paper to increase taxes on cigarettes from the present 67%-72% to 90% of purchase price.

 Such a move would likely result in tobacco companies increasing their prices as well.   

“I feel very strong about this measure and feel that the people of Sri Lanka would benefit from such a step. All the money raised from these taxes will be directly used for public healthcare services,” he said. 

The Health Minister also defended the increase of VAT on private healthcare, insisting that the Government plans to make all outpatient costs even at private hospitals free of VAT and revert to the previous system. 

Responding to questions over inconsistent Government policies Dr. Senaratne insisted the ‘Yahapalanaya’ establishment was one that “listens to the people,” and called for more transparency in the Budget formulation process. 

“The detailed clauses of the Budget are not presented to Cabinet members. We are simply given a policy outline. Ministers also hear the full Budget when it is presented in Parliament by the Finance Minister. This is why there are debates on the Budget before it is passed. But under the previous Government, the President was also the Finance Minister so the space for dissent was limited. In this Government there is space for discussion and change. That is how it should be,” he said. 

In the first half of 2015 Ceylon Tobacco Company (CTC) contributed Rs. 43.7 billion to the Government as excise and other taxes. This is an increase of 18% in comparison to the same period last year and was primarily driven by an excise-led price increase experienced in October 2014 along with higher volumes during the first six months of 2015. The price increases announced ahead of the 2016 Budget was expected to deliver 10% more revenue to the Government.

Responding to questions the Cabinet Spokesman was also confident Prime Minister Ranil Wickremesinghe would stick to a statement made when he met civil society activities over the weekend to remove Central Bank Governor Arjuna Mahendran.

Provincial Councils to get Budget funds directly from Treasury

In a major step that could reduce red tape, Cabinet yesterday green-lighted a proposal to allocate Budget funds directly from the Treasury to Provincial Councils.

According to a mechanism introduced in the 2016 Budget proposals, budgetary allocations for Provincial Councils will be made under the Ministry of Provincial Councils and Local Governments. 

However, at a meeting of the Cabinet of Ministers held with the participation of Chief Ministers of Provincial Councils earlier, it has been decided to apply the old method used till the end of 2015.

“Accordingly, the Cabinet of Ministers has approved to amend the Appropriation Act No. 16 of 2015, to facilitate the allocation of budgetary provisions directly by the General Treasury to Provincial Councils,” Cabinet Spokesman Dr. Rajitha Senaratne told reporters. 

Matters have been discussed on issues confronted during implementing activities of Provincial Councils efficiently and productively at the beginning of the Cabinet Meeting, and has focused on matters regarding recruitment of teachers to schools under Provincial Councils, filling vacancies of posts of principals and teachers, difficulties faced in obtaining resources for Provincial Councils, and waste disposal. 

The need to impalement development projects with the close coordination between Provincial Councils and Linear Ministries was also emphasised. 

The move is expected to reduce bureaucratic delays and allow Provincial Councils to have more autonomy and efficiency in making appointments. (UJ)