PM Resolves Issues Over Budget 2016

by Hasitha Ayeshmantha

The Prime Minister made a special statement in parliament with regard to the issues raised by trade unions over the proposals of the 2016 budget.

 

Salaries – EPF/ETF

In his statement, Prime Minister Ranil Wickremesinghe stated that as a response to the demands made by trade unions, he reiterates that the EPF and the ETF would be maintained as separate entities under the CBSL. Originally, the government proposed to merge the two accounts and hand them over to the Central Bank of Sri Lanka (CBSL). The trade unions also could not come to a common ground on the situation as certain trade unions proposed to support the government’s decision while the others expressed concerns. However, many discussions between the trade unions and government representatives were held over the matter and they finally requested the government to not to go ahead with the proposed amalgamation.

He added that a new management system would be introduced to prevent the misuse of these funds. Noting that the pensions of public sector employees will not be annulled in any way, the Prime Minister said a change would only be made to the pension system.

The former regime came under fire from all corners due to the alleged ‘investments’ made from the EPF/ETF funds. Allegations were levelled against former President Mahinda Rajapaksa and former Governor of the Central Bank of Sri Lanka Ajith Nivard Cabraal.

The allegations state  that the former Governor of the Central Bank has allegedly caused a loss of Rs 12 billion to the EPF Fund by intentionally investing in low shares in the stock market, and by being party to a process referred to as ‘pumping and dumping’ with full knowledge of the fact and has thereby committed the offence of criminal breach of trust. Charges levelled against Mahinda Rajapaksa state that he influenced the actions committed by the former Central Bank Governor and that the act was committed during his tenure as the President of the country.

According to the Prime Minister’s next amendment, a sum of Rs.2, 000 will be added to the basic salaries of public sector employees, at the beginning of next year, as the first phase of the scheme to add allowances to employees’ basic wages.

This is an issue which has been in a ‘tug-of-war’ situation for sometime now as there was much confusion as to whether the aforementioned Rs. 2,000 would be deducted from the employees’ allowances and added to the basic salary or whether it would be added directly to their basic salary. Following the Prime Minister’s statement it has been understood that the amount will be added directly to the basic salary.

However, Wickremesinghe also guaranteed that at the point of retirement, all allowances would be added to employees basic salaries. This again, was an issue raised by the trade unions and on a previous encounter with The Sunday Leader, trade union representatives said that the government should take immediate steps to add the common allowances to the pension and that it should be done regardless of the date the employee commenced employment.

The next amendment proposed by the Prime Minister was that the National Salaries Commission (NSC) would be re-established and a comprehensive report would be obtained within six months. The National Salaries commission has been under the ‘pump’ for sometime, especially with complaints of pension anomalies taking root. The pensioners associations and the trade unions were staunch in their protest. Even during the time of the former regime the unions pressured the government to intervene in the matter and come up with a solution to increase the efficiency of the commission.

The next amendment was that all employees retiring from January 2016, would be entitled to the ‘Agrahara’ medical insurance benefits. The Prime Minister also requested the trade unions to hold discussions with the Chairmen of Banks and submit a common proposal with regard to removing pawning and leasing limits imposed on banks.

 

Taxes

In the matter of the 02% tax on withdrawals exceeding one million rupees from bank accounts, the Prime Minister proposed that it would be studied and a decision would be made, after obtaining a report from the CBSL. This particular proposal when delivered on the announcement of the Budget created much controversy and was subjected to severe criticism from many parties.  Many questioned as to what is the motive behind the government imposing such a tax on a matter of a cash transaction.

In addition, he stated that no changes would be made to the eight-hour workday and that the Rs.2,500  wage hike for private sector employees would be granted from May 2016. This was another area where the trade union protestors were adamant about. With the blue-green government’s maiden Budget requesting to change the eight hour working to a nine hour working day system, the working sector erupted in protest claiming that the government has breached the trust of the working people by increasing the number of working hours  and by not giving consideration into facts such as the increment of wages and resolving the pension anomalies.

 

Mixed signals from SLFP

Speaking on the Budget 2016 State Minister of Highways Dilan Perera said that Budget 2016 was subjected to several key amendments during the Committee Stage. The budget is debated at the Committee Stage aiming to make the necessary amendments even though that opportunity has not been utilised thus far, until this year. Accordingly, several proposals of the budget have been re-considered including the proposals relating to vehicle permits, vehicle emission testing tax and many more.

The Minister also added that the Budget 2016 has ‘plus’ as well as ‘minus’ points. The budget has tremendous steps for the betterment of the education sector. Under this, undergraduates will be allowed to obtain interest free loans for their educational needs. A housing scheme will be carried for estate employees. However, several proposals of the budget should be re-considered. The proposals relating to vehicle permits, vehicle emission testing tax should be revised. The budget has not concentrated on coconut and tea cultivators and growers when giving the fertilizer subsidy.

However, he noted that for the first time in the political history of the country Budget 2016 was amended at the Committee Stage. Therefore, according to Perera, the budget will be passed in Parliament with a clear majority at the Third Reading on December 19.

 

Amendments made to the Budget:

Pensions of public sector employees will not be annulled.

Rs.2,000 will be added to the basic salaries of public sector employees.

All employees retiring from January 2016, will receive Agrahara.

At retirement, all allowances would be added to employees basic salaries.

The National Salaries Commission will be re-established.

02% tax on withdrawals exceeding one million rupees from bank accounts put under study.