Nov 07, Colombo: Sri Lanka President Mahinda Rajapaksa in his capacity as the Minister of Finance proposed the 2008 budget today around 9.40 AM.

In his one hour and twenty minute budget speech, he said the government maintained 7% growth rate within the past three years. Per capita income reached 1,500 US dollar mark and the government managed to reduce unemployment rate to 6.2%, said the President.

The total state income estimated for 2008 is Rs. 750.4 billion and the expenditure is Rs. 1044.18 billion leaving a deficit of Rs. 293.78 billion.

President who is also the Defense Minister requested a 20% increase in the defense budget, raising it to Rs. 166.4 billion from Rs. 139 billion last year.

The President proposed to reduce VAT on petrol (petroleum) from current 15% to 5% and said that his consideration is for not to increase the prices of diesel and kerosene further.

Five-year tax holidays were announced for private investment in Eastern Province under ‘Eastern Reawakening Programme’ and for co-operative societies to ease the cost of living.

A new environment conservation tax was proposed to be introduced through a new act.