Hon. Nishantha Jayaweera - Deputy Minister of Economic Development

¶ 01 Mr. Chairman, today we debate the Heads of the Ministry of Finance, Economic Stabilization and National Policies; the Ministry of Trade, Commerce, Food Security and Cooperative Development; and the Ministry of Irrigation and Community Infrastructure.

¶ 02 First, I extend the Government’s deepest condolences to the families of those who lost their lives due to the unexpected “Ditscha” cyclone and to all affected and displaced. The entire State apparatus, including Police and the security forces, have devoted time, effort and resources—day and night—to rescue and relief. We thank them.

¶ 03 Understanding the gravity of this crisis, the Government established the “Rebuilding Sri Lanka” Fund. The Opposition misinterpreted it, claiming professionals like doctors and engineers are not on the committee. That is incorrect. The fund’s purpose is to mobilize resources to support the Disaster Management Centre and other agencies in reconstruction and recovery. The Deputy Minister of Finance and the Secretary to the Treasury, among others, have been appointed to raise significant funds through discussions with foreign governments, NGOs and donors. We assure full transparency, accountability and fiscal discipline in utilizing this fund.

¶ 04 On the Budget proposals under these Heads: the Ministry of Finance has allocations of Rs. 265 billion for capital, Rs. 341 billion for recurrent, and Rs. 4,495 billion for debt service. Of the total Rs. 5,102 billion under the Ministry, Rs. 4,495 billion is for debt service.

¶ 05 It was said that the Ministry amassed funds but did not spend. Documents show that Rs. 500 billion from savings will be used in 2026 to retire maturing Treasury Bills, reducing rollover needs and interest costs.

¶ 06 Because funds are available, we can enhance relief. The Government has increased the dry-ration allowance and has issued a circular to provide Rs. 25,000 per affected household to clean and make homes habitable again.

¶ 07 On revenue measures: the Budget proposes to levy VAT and SSCL on imports of coconut oil and palm oil to ensure a level playing field with domestic producers. Similarly, VAT will be applied to imported textiles, aligning with domestic VAT treatment. For vehicles, SSCL will now be applied at import, replacing application at sale, as requested by industry to better align cash flows with the point of import.

¶ 08 We have reduced VAT and SSCL registration thresholds to broaden the tax base, our key policy objective. While 18% VAT is high, our strategy is to expand the base—supported by modern systems like e-invoicing and advancing RAMIS—and then reduce the rate. Input credits mitigate cascading, and the incidence ultimately falls on final consumption.

¶ 09 We simplified the previously complex income tax regime—eliminating estimated return filings and redundant statements—to improve compliance. We are investing in IT across Revenue, including a new building for the Inland Revenue Department, long delayed, and a single window at Customs under WTO Trade Facilitation to enable pre-clearance and faster processing.

¶ 10 We are also upgrading the Excise Department’s IT and legal framework to curb leakages.

¶ 11 Despite difficult times, the Government will use its capacity to steer the country to a better place.